Court Opinion

ID: 9566340
Source: CourtListenerOpinion
Date Created: 2023-08-21 19:37:33.769699+00
Date Added: 2024-06-11T09:37:12.846247
License: Public Domain

WEBB, Justice.
This case brings to the Court a question involving aggregating or stacking underinsured motorist coverages in several automobile policies. The question of stacking uninsured and underinsured motorist coverages has been a fruitful source of litigation. See Lanning v. Allstate Insurance Co., 332 N.C. 309, 420 S.E.2d 180 (1992); Harris v. Nationwide Mut. Ins. Co., 332 N.C. 184, 420 S.E.2d 124 (1992); Bass v. N.C. Farm Bureau Mut. Ins. Co., 332 N.C. 109, 418 S.E.2d 221 (1992); Smith v. Nationwide Mutual Ins. Co., 328 N.C. 139, 400 S.E.2d 44 (1991); Sutton v. Aetna Casualty and Surety Co., 325 N.C. 259, 382 S.E.2d 759 (1989).
The stacking litigation has arisen in large part from questions involving the interpretation of two parts of N.C.G.S. § 20-279.21, which was a part of the Motor Vehicle Safety and Financial Respon*590sibility Act in effect at the time the accident in this case occurred. N.C.G.S. § 20-279.21(b)(3) provided in part:
For purposes of this section “persons insured” means the named insured and, while resident of the same household, the spouse of any such named insured and relatives of either, while in a motor vehicle or otherwise, and any person who uses with the consent, expressed or implied, of the named insured, the motor vehicle to which the policy applies and a guest in such motor vehicle to which the policy applies or the personal representative of any of the above or any other person or persons in lawful possession of such motor vehicle.
N.C.G.S. § 20-279.21(b)(4) provided in part:
In any event, the limit of underinsured motorist coverage applicable to any claim is determined to be the difference between the amount paid to the claimant pursuant to the exhausted liability policy and the total limits of the owner’s underinsured motorist coverages provided in the owner’s policies of insurance; it being the intent of this paragraph to provide to the owner, in instances where more than one policy may apply, the benefit of all limits of liability of underinsured motorist coverage under all such policies: Provided that this paragraph shall apply only to nonfleet private passenger motor vehicle insurance as defined in G.S. 58-40-15(9) and (10).
Several principles have evolved from the interpretation of these two sections. One principle is that the purpose of uninsured and underinsured coverage is different from liability coverage. The statutory scheme for liability coverage is essentially vehicle oriented while uninsured and underinsured coverage is essentially person oriented. Smith v. Nationwide Mutual Ins. Co., 328 N.C. at 148, 400 S.E.2d at 50. Another principle which has been developed is that N.C.G.S. § 20-279.21(b)(3) provides for two classes of persons insured. The first class consists of the named insured and, while resident of the same household, the spouse of the named insured and relatives of either. The second class consists of any persons who use an insured vehicle with the consent of the owner, and guests in the vehicle. Insureds of the first class are covered whether or not they are injured while in the insured vehicle. Insureds of the second class are insured only when in the vehicle and only for coverage provided for persons .in that vehicle. Crowder v. N.C. Farm Bureau Mut. Ins. Co., 79 N.C. App. 551, 340 S.E.2d 127, *591disc. rev. denied, 316 N.C. 731, 345 S.E.2d 387 (1986). The plaintiff in this case was an insured of the first class.
It seems from the principles discussed above that the plaintiff, being an insured of the first class under the policies of his father and his brother, is covered by those policies and should be allowed to stack them with his own policy. In several cases, it has been held that an insured of the first class who is not an owner of the policy is covered by the policy and entitled to stack the coverages. See Grain Dealers Mutual Ins. Co. v. Long, 332 N.C. 477, 421 S.E.2d 142 (1992); N.C. Farm Bureau Mut. Ins. Co. v. Hilliard, 90 N.C. App. 507, 369 S.E.2d 386 (1988); Crowder v. N.C. Farm Bureau Mut. Ins. Co., 79 N.C. App. 551, 340 S.E.2d 127, disc. rev. denied, 316 N.C. 731, 345 S.E.2d 387. The question raised in this case, that the owner must share some benefit before an insured of the first class may be covered, was not raised in any of those cases.
In this case, the Court of Appeals held that although the plaintiff was an insured of the first class under the policies of his father and his brother, he could not stack the coverages of those two policies with his own policy. The Court of Appeals based its holding on the language of Harris v. Nationwide Mut. Ins. Co., 332 N.C. 184, 420 S.E.2d 124. In Harris, we held that a minor child living in the household with her parents was covered by the underinsured motorist coverages in her parents’ policy.
In Harris, the insurer argued that the references to the owner in N.C.G.S. § 20-279.21(b)(4) showed that only the owner of the policy could stack the coverages. The insurer pointed specifically to that part of the subsection which said “it being the intent of this paragraph to provide to the owner, in instances where more than one policy may apply, the benefit of all limits of liability of underinsured motorist coverage[.]” In answer to this argument, we left open the question of whether there must be benefit to the owner for the policy to cover other first class insureds and said it was clear that there was a benefit to the owner in that case. This benefit was the protection for his minor child whom he was obligated to support. The Court of Appeals in this case interpreted our opinion in Harris to mean that there must be some benefit to the owner for an insured of the first class to be covered by the owner’s policy.
We believe the sections of the statute, as we have interpreted them, require that the plaintiff be allowed to stack, both interpolicy *592and intrapolicy, the underinsured motorist coverages of the policies of his brother and his father. Subsection (b)(3) says a relative living in the same household with the owner of the policy is a “person insured.” We have said this makes him or her an insured of the first class. If a person is a “person insured” under a policy then he or she should have all the rights of a person insured by the policy. We believe this specific language should govern over more general language as to how the owner should be benefitted. The plaintiff may stack because he is a person insured under each policy.
Nationwide next contends that if the plaintiff is covered by the underinsured motorist coverages of his father and brother, whatever he receives through those coverages must be reduced by what he received from the tortfeasor’s liability coverage and from the underinsured motorist coverage on his own vehicles. It bases this contention on a clause found in the policies of the plaintiff’s father and brother which says:
Any amount otherwise payable for damages under this coverage shall be reduced by all sums:
1. Paid because of the bodily injury or property damage by or on behalf of persons or organizations who may be legally responsible.
Nationwide contends this is a reduction clause which reduces what it must pay. Assuming that if we interpreted this clause according to Nationwide’s contention it would not violate N.C.G.S. § 20-279.21, we do not read this clause as does Nationwide. The reduction for which this clause provides is for payments made for those legally responsible to the plaintiff. This would be the tortfeasor. Nationwide may not reduce its payments for anything paid by the underinsured motorist coverage on the policy owned by the plaintiff. Dungee v. Nationwide Mutual Insurance Co., 108 N.C. App. 599, 424 S.E.2d 234 (1993).
Finally, Nationwide contends that the “fleet policy” provision of N.C.G.S. § 20-279.21(b)(4) prevents the plaintiff from stacking in this case. It says that allowing stacking in this case means that policies covering six vehicles will be stacked. It says this is contrary to the purpose of the statute because a fleet policy is defined as a policy covering five or more vehicles. Nationwide does not contend that any policy involved in this case is a fleet policy. The fleet policy provision does not apply.
*593We hold that the plaintiff is entitled to stack with his own policy the policies of his father and brother, both interpolicy and intrapolicy. Any amount he receives under these policies will be reduced by the amount he receives from the tortfeasor’s exhausted liability policy.
For the reasons stated herein, the decision of the Court of Appeals is reversed.
REVERSED.