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Insureds’ right to recovery for UIM, subject to the offset of the per occurrence limit.
Linda Connors v. Government Employees Insurance Company
Plaintiff, Linda Connors, brought suit against her insurance company, Government Employees Insurance Company (“GEICO”), individually and on behalf of her deceased husband for underinsured motorist benefits arising from a motor vehicle accident. On April 14, 2009, the Connorses were involved in a serious motor vehicle accident with Adam Pond when Pond pulled out of a driveway and struck the Connorses’ vehicle. Plaintiff suffered minor injuries, but her husband suffered severe injuries and died on January 31, 2011 from the injuries. At the time, Pond was insured with Allstate Insurance Company, with liability limits of $100,000 per person and $300,000 per occurrence. With GEICO’s consent, the Connorses accepted the limits of the Allstate policy, each taking $100,000, which exhausted the limits of Pond’s liability policy. Thereafter, the Connorses sought underinsured motorist benefits (“UIM”) from GEICO, which provided $300,000 per person and $300,000 per accident.
The parties disagreed as to how the liability recovery offset the GEICO UIM recovery. “GEICO asserted that, after crediting the policy for $200,000, which [the Connorses] had received from Allstate, only $100,000 of UIM benefits remained. The Connorses disagreed with GEICO’s calculation, contending that the ‘per person’ limit of the policy should apply, leaving $300,000 in UIM benefits remaining.” The Connorses agreed that GEICO was entitled to an offset of $200,000, but argued that the offset should be applied as $100,000 offsets to the per person amounts, providing them with $400,000 available coverage. That coverage was then capped at $300,000 for the occurrence.
The Connorses filed for relief from the Maryland Insurance Administration, who agreed with GEICO’s interpretation of the contractual offset provision. GEICO then tendered to the Connorses the $100,000 it asserted was available under the policy. The Connorses filed a declaratory judgment action in the Circuit Court for Montgomery County in December 2010 seeking a determination as to the actual amount owed under the UIM coverage. After cross motions for summary judgment were filed, the Court found in favor of GEICO. The Connorses timely appealed.
The Court of Special Appeals reviewed the grant of summary judgment de novo. The Connorses argued that the trial court erred in interpreting the contract, and that the per occurrence limit was subservient to the per accident limit. As such, each claimant was entitled to $300,000 of coverage, thus providing a total of $600,000 of coverage that was capped at $300,000 for an occurrence.
The Court analyzed the language of the insurance policy, as well as Maryland’s UIM statutory scheme. The Court observed that MD. CODE ANN., INS., § 19-509 was intended to “provide an injured insured with resources equal to those which would have been available had the tortfeasor carried liability coverage equal to the amount of uninsured motorist coverage which the injured insured purchased from his own insurance company” but permitted the parties to contract for higher amounts. The Court then interpreted the insurance policy in accord with the same principles applicable to the construction of other contracts and found that the policy, in clear and unambiguous language, created a aggregate cap of $300,000 for multiple party accidents and the per person coverage was subject to that cap. The Court further held that even if the language were ambiguous, accepting the Connorses’ argument would provide for disparate UIM recoveries based solely on the amount of insurance coverage carried by the tortfeasor, which ran contrary to Maryland’s theory that insureds were entitled to recover the difference of the limits of their UIM and the amount paid by the tortfeasor. The Court affirmed the trial court’s judgment in GEICO’s favor, holding that only $100,000 was owed under the UIM policy.
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