Title: Superior Insurance Company v. Hunter

State: virginia

Issuer: Virginia Supreme Court

Document:

Present:  All the Justices 
 
SUPERIOR INSURANCE COMPANY 
 
OPINION BY 
v.  Record No. 982671  
JUSTICE LAWRENCE L. KOONTZ, JR. 
 
September 17, 1999 
PERCELL HUNTER AND LEKEDRA HUNTER  
 
FROM THE CIRCUIT COURT OF THE CITY OF HAMPTON 
Wilford Taylor, Jr., Judge 
 
 
In this appeal, we consider whether the underinsured 
motorist provision of a tortfeasor’s automobile liability 
insurance policy is available to satisfy claims of passengers in 
the tortfeasor’s vehicle who are insured under the same policy 
and whose claims for damages exceed the limits of the policy’s 
liability coverage.  
 
The pertinent facts were stipulated.  On January 10, 1997, 
appellees Percell Hunter and his daughter Lekedra D. Hunter, 
plaintiff’s below, were passengers in a vehicle owned by Percell 
Hunter and driven by his wife, Eva L. Hunter.  The vehicle 
collided with a vehicle driven by Ikesha M. Dye.  The accident 
caused injuries to Dye and a passenger in her vehicle, as well 
as to plaintiffs. 
At the time of the accident, Percell Hunter was the named 
insured under an automobile insurance policy issued by 
appellant, Superior Insurance Company (Superior).  Eva Hunter 
and Lekedra Hunter were also named insureds under the terms of 
the policy as persons who were residents of Percell Hunter’s 
household.  The policy provided liability coverage of $25,000 
for each person injured, limited to $50,000 per accident.  The 
policy also provided uninsured/underinsured motorist coverage 
with the same limits. 
Dye and her passenger filed claims for their damages with 
Superior alleging negligence on the part of Eva Hunter.  
Superior paid these claims, which totaled $38,500. 
Plaintiffs subsequently filed claims with Superior for 
damages resulting from their personal injuries and filed suit 
against Eva Hunter, alleging that her negligence caused their 
injuries.1  At that time, because of the prior payments to Dye 
and her passenger, only $11,500 of the $50,000 in total 
liability coverage for the accident remained available to 
satisfy plaintiffs’ claims.  Since their claims exceeded this 
amount, plaintiffs, in separate actions argued together at 
trial, sought declaratory judgments that they were entitled to 
access the policy’s underinsured motorist coverage to satisfy 
their claims. 
At trial, plaintiffs argued that Percell Hunter’s vehicle 
was underinsured because, under Code § 38.2-2206(B), “the total 
amount of bodily injury and property damage coverage applicable 
                                                 
1For purposes of this appeal, Eva Hunter is considered 
solely responsible for plaintiffs’ injuries.  Accordingly, 
Superior’s policy is the sole applicable insurance policy for 
plaintiffs’ claims.  
 
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to the operation or use of the motor vehicle and available for 
payment for such bodily injury or property damage . . . is less 
than the total amount of uninsured motorist coverage afforded 
[them].”  They further maintained that Code § 38.2-2206(A) 
obligates an insurance provider “to make payment for bodily 
injury or property damage caused by the operation or use of an 
underinsured motor vehicle to the extent the vehicle is 
underinsured.”  Thus, plaintiffs asserted that, because only 
$11,500 in liability coverage was “available for payment” at the 
time they made their claims, they should each be allowed to have 
access to the underinsured motorist coverage provided by 
Superior’s policy. 
In a letter opinion, the trial court agreed with 
plaintiffs’ assertions and found that Percell Hunter’s vehicle 
was underinsured to the extent that the $11,500 remaining of the 
liability coverage was less than $25,000, the total amount of 
uninsured motorist coverage for each person injured in the 
accident.2  We awarded Superior this appeal and consolidated the 
underlying cases. 
                                                 
2The trial court held that “Superior’s policy definitions 
for ‘available for payment’ and ‘underinsured motor vehicle’ are 
similar to [those contained in Code § 38.2-2206].”  For purposes 
of our analysis, we agree that there is no material or 
significant distinction between the policy terms and the 
statute.  Accordingly, we need construe only the provisions of 
this statute to resolve the issue presented here.  
 
 
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On appeal, Superior contends that resolution of the issue 
of underinsured motorist coverage in this case requires a two-
step analysis under the provisions of Code § 38.2-2206.  Because 
it is only obligated to make payments for bodily injury or 
property damage caused by the operation of an underinsured motor 
vehicle pursuant to the mandate of subsection (A), Superior 
contends that the first step or “threshold question” is to 
determine whether the vehicle in question is underinsured as 
defined in subsection (B).  Only when it is determined that the 
vehicle is underinsured is the second step, viz., the extent to 
which the vehicle is underinsured, reached.  Superior contends 
that the trial court erred in the present case because it failed 
to make the proper initial determination that Percell Hunter’s 
vehicle was not underinsured as to the claims of Percell and 
Lekedra Hunter.  
 
In essence, Superior’s position is that the mathematical 
calculations involved in determining whether a vehicle is 
underinsured are to be made as of the time of the particular 
accident.  The crux of the plaintiffs’ position is that those 
calculations are to be computed as of the time their claims are 
made.  As we will demonstrate, in the present case the 
distinction in these positions dictates entirely different 
results.  It is in this context that the focus of our analysis 
is directed to Code § 38.2-2206(B). 
 
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Code § 38.2-2206(B), in pertinent part, provides that: 
A motor vehicle is “underinsured” when, and 
to the extent that, the total amount of 
bodily injury and property damage coverage 
applicable to the operation or use of the 
motor vehicle and available for payment for 
such bodily injury or property damage, . . . 
is less than the total amount of uninsured 
motorist coverage afforded any person 
injured as a result of the operation or use 
of the vehicle. 
“Available for payment” means the amount of 
liability insurance coverage applicable to 
the claim of the injured person for bodily 
injury or property damage reduced by the 
payment of any other claims arising out of 
the same occurrence. 
 
(Emphasis added.) 
 
As we have noted above, Superior’s policy contained 
liability and uninsured motorist coverage with identical limits 
of $25,000 per person or $50,000 per accident.  Thus, applying 
the above statutory provisions at the time of the accident, 
Superior contends that the vehicle in question was not 
underinsured with respect to the plaintiffs’ subsequent claims.  
Superior contends that this is so because, at the time of the 
accident, the liability coverage was not less than the uninsured 
motorist coverage afforded to the plaintiffs.  Rather, the total 
liability coverage was “available for payment” because that 
coverage had not been “reduced by the payment of any other 
claims [those of Dye and her passenger] arising out of the same 
occurrence.”  Applying the same statutory provisions at the time 
 
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their claims were made, plaintiffs contend that the total 
liability coverage under Superior’s policy was no longer 
“available for payment” because it had been reduced by the 
payment to the other parties injured in the same occurrence.  In 
this context, plaintiffs contend that as to their claims the 
vehicle was underinsured because the liability coverage was less 
than the uninsured coverage “afforded” to them.  Thus, the 
distinction between the parties’ conflicting interpretations of 
Code § 38.2-2206(B) is the point in time when the mathematical 
calculations of liability and uninsured/underinsured coverage 
are computed. 
 
In support of its contentions, Superior relies primarily on 
our holding in Trisvan v. Agway Insurance Co., 254 Va. 416, 492 
S.E.2d 628 (1997).  In that case, the claimant was a passenger 
in a car driven by the tortfeasor and was injured when the 
vehicle overturned in a single-car accident.  At that time, the 
car was insured by a policy issued by the Integon Indemnity 
Corporation with liability coverage of $25,000 per person for 
bodily injury and the identical amount of uninsured/underinsured 
motorist coverage.  The claimant was insured under a separate 
policy issued by the Agway Insurance Company with a limit of 
$100,000 for uninsured/underinsured motorist coverage.  The 
accident resulted in damages for injuries to the claimant 
exceeding $125,000.  Integon paid the claimant $25,000 under its 
 
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liability policy and Agway paid the claimant $75,000 under 
underinsured motorist coverage provided by its policy.   
We affirmed the trial court’s judgment that, under Code 
§ 38.2-2206, the $75,000 payment by Agway was the extent to 
which the vehicle was underinsured.  We rejected the claimant’s 
assertion that in calculating the amount by which a motor 
vehicle is underinsured pursuant to subsection (B) the 
uninsured/underinsured motorist coverage of the tortfeasor’s 
vehicle even in a single car accident must be “stacked” or added 
onto other available coverage.  In Trisvan, because Code § 38.2-
2206(A) provides that the amount of uninsured/underinsured 
motorist coverage can either be equal to or less than the 
liability coverage, but not more than the level of liability 
coverage, we concluded that “when comparing the amounts of 
liability and [underinsured] motorist coverage in the 
tortfeasor’s policy applicable to his motor vehicle, that 
vehicle cannot be . . . underinsured” as contemplated by 
subsection (B) of Code § 38.2-2206.  254 Va. at 420, 492 S.E.2d 
at 629.  In that case, we were not required to address the 
construction of the “available for payment” term under 
subsection (B) because there the total amount of the 
tortfeasor’s liability coverage was available for payment to the 
claimant and, indeed, was paid to him. 
 
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In the present case, for the reasons that follow, we 
conclude that the trial court erred in finding that the vehicle 
was underinsured.  The total amount of liability coverage for 
the tortfeasor, Eva Hunter, has been reduced in the amount of 
$38,500 by Superior’s payment to Dye and her passenger.  Only 
$11,500 remains available for payment from the liability 
coverage of Superior’s policy, as compared with $25,000 per 
injured person under the policy’s uninsured/underinsured 
motorist coverage.  Hence, the language of subsection (B) 
standing alone might suggest that Percell Hunter’s car was 
“underinsured,” therefore, producing a different result here 
than in Trisvan, where the amount of liability coverage 
available for payment had not been reduced by other claims. 
 
Nonetheless, in construing Code § 38.2-2206 as a whole, we 
conclude, even under the facts of this case when only one 
insurance policy is involved, that the General Assembly did not 
intend that a vehicle could be “underinsured” with respect to 
itself.  In light of the provisions of subsection (A), it is 
clear that subsection (B) contemplates a situation in which 
there are at least two applicable insurance policies at 
issue⎯the liability coverage provided by a tortfeasor’s 
insurance policy, and the uninsured/underinsured motorist 
coverage provided by an injured party’s insurance policy. 
 
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Subsection (A) provides that the limits of the uninsured/ 
underinsured coverage of any policy issued in Virginia “shall 
equal but not exceed the limits of the liability insurance 
provided.”  It does not permit the amount of liability coverage 
provided by a policy to be less than uninsured/underinsured 
motorist coverage provided by that policy.  The total amounts of 
this coverage necessarily is to be determined at the time the 
policy is issued by the insurance company. 
The definition of “underinsured” in subsection (B), 
however, contemplates just such a scenario, that is, where the 
amount of the liability coverage is less than the amount of the 
uninsured/underinsured motorist coverage.  The two subsections 
can be reconciled only if it is assumed, as we do here, that 
subsection (B) contemplates a situation in which there are two 
insurance policies at issue.  Moreover, subsection (A) states 
that the underinsured motorist coverage must “obligate the 
insurer to make payment for bodily injury or property damage 
caused by the operation or use of an underinsured motor 
vehicle.”  The reference to “an underinsured motor vehicle” 
contemplates the existence of a second insurance policy. 
Read together, subsection (A) and subsection (B) do not 
contemplate that, under the circumstances of this case, a 
claimant would be permitted to recover under both the liability 
and uninsured/underinsured motorist coverages of a single 
 
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policy.  In the present case, the uninsured/ underinsured 
motorist coverage provided by Superior’s policy would not be 
“afforded to” plaintiffs.  Thus, there are no underinsured 
motorist coverages afforded to plaintiffs to compare with the 
amount of liability coverage “available for payment.”  
Plaintiffs urge that this case should be distinguished from 
Trisvan because here the passengers are insureds under the same 
policy as the tortfeasor/driver.  Before the underinsured 
motorist provision was added to Code § 38.2-2206, a person 
injured by an uninsured motorist could receive greater recovery 
than if injured in the same accident by an insured motorist 
where that person had uninsured motorist coverage in an amount 
greater than the liability limits of the insured tortfeasor.  
See Nationwide Mutual Insurance v. Scott, 234 Va. 573, 363 
S.E.2d 703 (1988).  One obvious purpose of the underinsured 
motorist provision was to allow insureds to receive the same 
level of protection whether an insured or uninsured driver 
injures them.  Id. at 575-76, 363 S.E.2d at 704.  The provision 
was intended to protect injured parties in situations where the 
amount of coverage available to them was beyond their control, 
“not to . . . expand protection to injured parties generally.”  
Trisvan, 254 Va. at 419, 492 S.E.2d at 629. 
The construction of Code § 38.2-2206 urged by plaintiffs, 
however, would allow plaintiffs to augment the insurance 
 
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protection afforded by their liability policy.  As we explained 
in Trisvan, this would constitute an “arbitrary expansion of 
[their] recovery options.”  Id.  Had plaintiffs contracted for 
more liability coverage they would have been able to employ it 
to cover their claims from this accident.  They cannot now 
augment their liability coverage by accessing the underinsured 
motorist coverage of their own policy.  
Subsection (G) provides further evidence that Code § 38.2-
2206 does not contemplate injured passengers recovering under 
both the liability and underinsurance provisions of a single 
automobile policy.  That subsection gives insurers a right of 
subrogation allowing them to recover any payments made under the 
uninsured/underinsured motorist provision of their policies from 
the tortfeasor.  In this case, were appellees allowed to recover 
under the underinsured motorist provision of the policy, 
Superior could subrogate against its insured, Eva Hunter.  We 
remain convinced that the General Assembly did not intend such a 
result when it decided to allow insureds to utilize their 
uninsured motorist coverage when injured by an underinsured 
motorist.  See Trisvan at 420, 492 S.E.2d at 629. 
For these reasons, we hold that the underinsured motorist 
provision of a tortfeasor’s automobile liability insurance 
policy is not available to satisfy claims of passengers who are 
insureds under the same policy and whose claims exceed the 
 
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limits of the policy’s liability coverage.  Accordingly, we will 
reverse the judgment of the trial court and enter final judgment 
for Superior. 
Reversed and final judgment. 
 
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