Opinion ID: 3011623
Heading Depth: 3
Heading Rank: 2

Heading: Questions between the injured party and us

Text: regarding whether the injured party is an insured under this coverage, or the limits of such coverage, are not subject to arbitration and shall be decided by a Court of law. (Endorsement 2360, Underinsured Motorist Coverage -- Non-Stacked (Pennsylvania) App. 39a) (emphasis in original). Thus, according to the clear ter ms of the arbitration agreement, questions regar ding whether a claimant is an insured for the purposes of UIM coverage or questions regarding the limits of UIM coverage are to be decided by the courts. All other questions should be submitted for arbitration.2 First, we consider if this case presents the question of whether the appellants are insureds for the purpose of UIM coverage. The insurance policy defines aninsured as one who is described as entitled to protection under each coverage. (App. 12a)(emphasis added). Accor dingly, we look to the section governing UIM coverage to deter mine whether the appellants are entitled to protection thereunder. That coverage endorsement provides that Nationwide will pay compensatory damages, including derivative claims, which are due by law to you or a relative fr om the owner or driver of an underinsured motor vehicle because of bodily injury suffered by you or a relative. (UIM Endorsement 2360, App. 38a)(emphasis added). Thus, for the purposes of this UIM coverage, an insured is the policy holder and relatives of the policy holder who are entitled by law to _________________________________________________________________ 2. Appellants also reference an arbitration provision found in the UIM coverage section of the auto insurance contract stating that if we and the insured disagree about the right to r ecover damages, or the amount of such damages . . . arbitration will ensue. (App. 29a). However, this broader arbitration provision was r eplaced by Endorsement 2360 to the insurance policy, which states [t]his endorsement replaces the policy's Underinsured Motorists coverage section. Coverage is subject to all terms and conditions of the policy, except as changed by this endorsement. (App. 38a). Accordingly, we look to the arbitration provision set out in Endorsement 2360 to determine the arbitrability of the instant dispute. 6 recover damages from the driver or owner of the underinsured vehicle. Nationwide argues that because appellants have recovered under the liability provisions and are prohibited by the policy language from also recovering under the UIM provisions that there are no damagesdue by law and thus, appellants do not fit within the definition of an insured. This argument misappr ehends the definition of an insured set out in the UIM pr ovisions. The definition does not require that damages be due by law under the insurance contract, as Nationwide argues. Instead, the definition requires only that damages be due by law from the driver of an underinsured vehicle. Nowhere does Nationwide suggest that the appellants are not entitled under the law to recover additional damages fr om Nicolucci, the driver of the underinsured vehicle. Even if Nationwide did advance such an argument, the issue of whether appellants are legally entitled to damages fr om Nicolucci is an issue that falls squarely within the agr eement to arbitrate, as set forth above. Further, Nationwide's argument begs the question of who is an insured because it argues that the appellants are notinsureds because Nationwide is correct about the underlying dispute regarding whether or not the dual r ecovery prohibition is enforceable. The question of whether that pr ovision is enforceable, however, is a separate and distinct question from whether the appellants are insur eds under the UIM coverage. The fallacy of Nationwide's argument is also demonstrated by the limits of payment pr ovision of the contract, which Nationwide references in support of its argument. That provision states, [t]he insured may recover for bodily injury under the auto liability coverage or the underinsured motorist coverage of this policy, but not under both coverages. (UIM Endorsement 2360, App. 40a) (emphasis added). This provision forms the basis of Nationwide's argument that there ar e no damages due by law and that, therefore, appellants ar e not insureds. However, this same provision effectively states that appellants are considered insur eds within the meaning of the UIM coverage. Thus, the underlying dispute in this case 7 cannot be characterized as a dispute regar ding whether the injured party is an insured and cannot escape arbitration on that basis. We must also consider whether this case pr esents a question regarding the limits of UIM coverage. We conclude that the dispute does not fall within the arbitration agreement because it is clearly within the second prong of the arbitration agreement as a dispute about the limits of the coverage. The UIM Endorsement contains the following provision: LIMITS OF PAYMENT Amounts Payable for Underinsured Motorists Losses We agree to pay up to the limits stated in the policy Declarations. The following applies to these limits: