Opinion ID: 852754
Heading Depth: 1
Heading Rank: 4

Heading: The Relationship Between Collision and UIM Coverages

Text: Just as Dunn contends that his UIM coverage is the only relevant consideration, Meridian argues that the collision coverage is controlling. We think neither party is correct in arguing for coverage under one Part to the exclusion of the other. Rather, as explained above, Parts C and D can be read in harmony to provide the maximum coverage under either, but no duplication of coverage. Dunn points out that Tennessee law provides that the $200 deductible in Part C's coverage does not apply under certain circumstances, but there is no statutory restriction of the $500 deductible under Part D. [2] Dunn argues that Meridian's waiver of the deductible demonstrates that Meridian was acting under Part C, not Part D, when it paid for repairs to his automobile. Meridian answers that it paid for repairs pursuant to Part D and chose to waive Dunn's $500 collision deductible in satisfaction of Tennessee's statutory requirements. Meridian does not explain what statutory requirements it cites. The only such requirement we are directed to is the UIM provision. Although Meridian's explanation is less than complete, we are not persuaded that the facts Dunn cites establish that Meridian was, or thought it was, paying benefits under collision coverage and not under UIM coverage. In any event, whatever Meridian was doing, or thought it was doing, the undisputed fact is that it paid the cost of repairs but not the amount of diminished value. The interpretation of the policy under these circumstances presents a question of law, even if Meridian was acting under a mistaken belief as to the applicable coverage. Moreover, exclusive reliance on UIM would frustrate the collision coverage provisions designed to compensate for the full amount of loss subject only to deductible amounts. Part D imposes no dollar limitation on the amount of compensable damage to Dunn's vehicle, but it does allow the insurer to choose either to pay the insured the actual cash value of the vehicle or to pay the costs of repair or replacement. In contrast, Part C limits the UIM coverage to $10,000. We assume that if the damage to Dunn's car exceeded the $10,000 limit of his UIM coverage, Dunn would seek the full amount of his cost of repair or replacement under the collision provision. Meridian notes that payments under an uninsured motorist policy must be reduced by the amount of payments received from other sources, and claims that uninsured motorist coverage is a safety net meant to fill gaps in insurance coverage, not to permit additional indemnity beyond that provided under other coverages. See Beam v. Wausau Ins. Co., 765 N.E.2d 524, 531 (Ind.2002); Am. Econ. Ins. Co. v. Motorists Mut. Ins. Co., 605 N.E.2d 162, 164-65 (Ind.1992) (payments received from other motorist's insurer must be deducted from underinsured motorist coverage limits); Hardiman v. Gov'tal Interinsurance Exch., 588 N.E.2d 1331, 1335 (Ind.Ct.App.1992), trans. denied (uninsured motorists benefits can be reduced by set off clause by amount of other liability and worker's compensation benefits received). We agree that no duplication is permitted under Indiana law, and find Tennessee law to be the same. See Rogers v. Tenn. Farmers Mut. Ins. Co., 620 S.W.2d 476, 482 n. 2 (Tenn.1981) (The UIM statute allows insurance contracts to contain language designed to avoid duplication of insurance and other benefits. (citing Tenn.Code Ann. § 56-7-1205)). Meridian points to the provision in Part C that [n]o payment will be made for loss paid or payable to the `insured' under Part D of the policy in support of its contention that it repaired the car pursuant to its collision coverage under Part D, and therefore has no obligation under Part C. We think this provision avoids duplication, but does not purport to import the Part D limits on collision coverage into the Part C UIM coverage. This case does not present an issue of whether other items of recoverable UIM damages  medical payments, personal injury, etc.  duplicate the amount insured under other provisions of the policy, or how the policy would respond to claims that duplicate but also exceed the UIM limit. Finally, Meridian contends that UIM does not extend the other coverages in its policy beyond their terms. But, unless the policy so provides consistent with the statute, it also does not limit the other coverages, or subject itself to their limits. UIM provides the liability coverage that is missing as to an uninsured motorist. If an insured incurs damages recoverable from an uninsured motorist beyond the insured's collision coverage, there are damages in addition to the loss that is payable under the Part D collision coverage. As we held in Allgood, collision coverage does not include diminished value. 836 N.E.2d at 245, 2005 WL 2789043. As a result, this element of damages is recoverable under UIM coverage by the terms of the policy, even if, as Meridian claims, it paid for the repair under its collision provision. In simple terms, Part C's Limit of Liability provision protects Meridian from paying the same repair cost under both Parts C and D, but it does not limit Meridian's liability for damages recoverable under UIM coverage that do not duplicate collision coverage.