Court Opinion

ID: 9697972
Source: CourtListenerOpinion
Date Created: 2023-08-25 19:38:28.655055+00
Date Added: 2024-06-11T18:20:37.488309
License: Public Domain

*16WALSH, Justice,
dissenting.
The majority has concluded that 18 Del.C. § 3902 precludes an insurer from contracting to limit or reduce its liability under uninsured automobile coverage by setting off the insured’s recovery from a tortfeasor. Because I believe neither the statute, by express terms or underlying policy, nor prior precedent of this Court support such a holding, I respectfully dissent.
Although the appellant, Hurst, received the proceeds of the tortfeasor’s liability insurance coverage in a somewhat convoluted fashion, the majority assumes, as do I, that the $40,000 received from Liberty Mutual was an “amount paid by or for any liable party” within the meaning of the reducing provision of Nationwide’s policy. The majority rejects this resulting offset as “void as an exclusion contrary to the express language of Section 3902(b)(1) and 3.” Op. at 14. In my view, the reduction provision is neither an exclusion nor violative of the clear language of the statute.
Section 3902 does not expressly provide that “a set-off or reduction (exhaustion) of other insurance coverage [is authorized only] against the full amount of damage for bodily injury that could be legally recovered by the claimant from the tortfeasor.” Op. at 14. Whether such a prohibition may be implied from the statute is doubtful. Both the majority and dissenting opinions in Kenner viewed the statute as silent on the question: “On its face, section 3902 does not address the question on appeal: whether monies recovered from a tortfeasor must be offset against the insured’s total damages or the insurer’s policy limits.” Aetna Cas. & Sur. Co. v. Kenner, Del.Supr., 570 A.2d 1172, 1179 (1990) (Moore, J., dissenting). The parting difference between the majority and the dissenters in Kenner turned on whether the policy provision was ambiguous, with the majority holding that it was not. Only after the dissenters deemed the policy ambiguous did they apply what they perceived as the public policy considerations underlying section 3902.
Logically, for the majority in this case to adopt the construction of section 3902 taken by the dissent in Kenner, it must first determine that the clearly worded reduction clause in the Nationwide policy is ambiguous. The dissent in Kenner was careful to interpret the policy language against the insurer to provide a result “more consistent with the overriding purpose” of section 3902, but only after a finding of ambiguity. Kenner, 570 A.2d at 1177 (Moore, J., dissenting). Indeed, the dissent did not attempt to extend its public policy invalidation to reduction clauses which were unambiguous: “Certainly section 3902 allows insurers to offset against policy limits, see e.g., Kulas [v. Nationwide Gen. Ins., Del.Super., C.A. No. 87C-OC-87, Babiarz, J., (May 30, 1989) ], slip op. at 6, 1989 WL 64086, but it does not require that approach.” Kenner, 570 A.2d at 1179-80 n. 2 (emphasis added).
In the face of an unambiguous policy provision, a statutory prohibition against a reducing clause should be based on a clear indication of legislative intent. I find no such force in the language of section 3902 or its history. To the contrary, the statutory scheme bespeaks a coordination of coverages. Section 3902(b)(3) provides that an insurer is not obligated to make payment under its uninsured coverage until after all other policies have been exhausted by the insured. Moreover, section 3902(a)(4) provides subrogation rights to the uninsured motorist coverage insurer. This latter provision is strongly suggestive of a legislative intent against “stacking” coverage to permit recovery of the aggregate amount of all policies which may cover the claimant’s injury. O’Hanlon v. Hartford Accident & Indemnity Co., D.Del., 439 F.Supp. 377, 383 (1977), modf'd, 639 F.2d 1019 (3rd Cir., 1981); see also Corso v. State Farm Mutual Auto. Insurance Co., D.Del., 668 F.Supp. 364, 370-71 (1987).3 The statutory right of subrogation by an uninsured motorist carrier contradicts any notion that *17the insurer is prohibited from reducing its liability within policy limits.
The majority has determined that reduction clauses are per se against the public policy of this State. Since the General Assembly has never explicitly announced such a policy, the rationale offered by the majority is that the motor vehicle insurance laws militate strongly in favor of full and complete compensation to innocent drivers. I subscribe fully to that rationale but believe that it is equally served by the mirror image approach to the concept of uninsured/under-insured insurance coverage. This approach proceeds on the established principle that uninsured motorist coverage in Delaware is supplemental in nature. Travelers Indemnity Co. v. Lake, Del.Supr., 594 A.2d 38, 42 (1991) (collecting eases). “Section 3902 permits a Delaware motorist to mirror his own liability coverage and take to the roads knowing that a certain amount of protection will always be available.” Id. The insured is thus afforded the opportunity to purchase insurance to provide a measure of self-protection to the same extent as if the tortfeasor had carried the same liability coverage as that of the insured. Kenner, 570 A.2d at 1175; Brown v. Comegys, Del.Super., 500 A.2d 611, 613 (1985).
The majority points to the decisions of this Court in Frank v. Horizon Assurance Co., Del.Supr., 553 A.2d 1199 (1989), and State Farm Mut. Auto. Ins. Co. v. Washington, Del.Supr., 641 A.2d 449 (1994), as inconsistent with Kenner and supportive of its ruling. I disagree. Both Frank and Washington are coverage exclusion, not reducing clause, cases. Frank involved an “other motor vehicle” exclusion while Washington addressed a disclaimer of coverage under a “named driver” exclusion. In each case the insurer sought to avoid all liability for uninsured/un-derinsured coverage, without regard to the existence, or sufficiency, of a tortfeasor’s liability coverage. In Frank, this Court, sitting en banc, rejected the application of “other motor vehicle” exclusion because it offended the public policy underlying section 3902 which is “achieved by making available coverage that mirrors his liability insurance through the purchase of uninsured motorist coverage.” Frank, 553 A.2d at 1205. In Washington, this Court applied Frank to invalidate a named driver exclusion of any coverage as repugnant to public policy. Neither case addressed the amount of coverage issue.
In my view, the difference between reducing provisions and exclusions is dispositive in this case. That difference is more than semantic since the former merely limits the amount of coverage while the latter controls the availability of coverage. As our prior precedent attests, exclusions are void because they are not contemplated by the rationale underlying section 3902. A reducing clause, however, does not seek to disclaim coverage but merely to limit or reduce the insurer’s liability only after other compensation has been received by the insured. The insured is thus not precluded from recovery — only from a recovery beyond the contracted-for policy limits. This approach achieves the mirror image of protection by permitting the insured to have confidence that the amount of liability insurance on the other driver will be equal to his own. In my view, section 3902 requires no more.
If there is a concern that, in a given situation, the amount of uninsured coverage will be insufficient to compensate an insured for the total damages suffered at the hands of an uninsured or underinsured tortfeasor, the insured is free to contract for more than the $300,000 worth of uninsured coverage which the statute mandates that an insurer offer. The parties to a contract of insurance may agree to change the nature of coverage to the extent not expressly prohibited by law. Moreover, the legislature may, by statute, require that reducing clauses not be applied to uninsured coverage despite the intention of the contracting parties. But such a change should not be accomplished by judicial interpretation in an area where express statutory standards have heretofore applied. See State Farm Mut. Auto. Ins. Co. v. Hallowell, Del.Supr., 426 A.2d 822, 827 (1981).
In sum, I would affirm the decision of the Superior Court as consistent with precedent and in keeping with the rationale underlying *18the mirror image concept of uninsured insurance. Accordingly, I respectfully dissent.

. More than seventeen years have passed since the District Court of Delaware held that a "limits of liability” provision similar to the one here did not violate the letter or undermine the public policy of section 3902. O’Hanlon, 439 F.Supp. at 383. The General Assembly has since had the opportunity to change the thrice-amended statute to override the result in O'Hanlon but has failed to do so. See Corso, 668 F.Supp. at 371.