Colwell v. Allstate Insurance Co.

1. The common issue presented by these two consolidated appeals is whether a tortfeasor-motorist is underinsured within the meaning of 23 V.S.A. § 941(f) where the tortfeasor's liability policy limits are greater than the injured party's underinsurance limits, but are insufficient to satisfy the injured party's damages because of payments made to other victims of the same accident. The Bonanno case also asks us to decide whether a self-insured employer must provide underinsurance motorists (UIM) benefits to its employees, and if so, whether the workers' compensation exclusivity statute bars payment of those benefits to the injured worker.

2. Regarding the first issue, we conclude that the plain language of 23 V.S.A. § 941(f) entitles an injured party to UIM coverage only when the liability limits of the tortfeasor's insurance policy are less than the injured party's uninsured/underinsured (UM/UIM) limits. In the Bonanno case, we conclude that self insurers must provide UIM coverage, and that 21 V.S.A. § 622, the exclusivity provision of Vermont's worker's compensation statute, does not bar the employee from seeking UIM benefits from his
self-insured employer.

I. Facts and Procedural History

A. The Colwell Case

3. On December 18, 1995, plaintiff Natalie Wetmore Colwell was injured in an automobile accident involving several other vehicles, and incurred damages in excess of $50,000. At the time of the accident, Colwell was covered under an automobile insurance policy defendant Allstate
Insurance Company issued. The policy provided $50,000 in single-limit UM/UIM coverage. The driver who allegedly caused the accident also had a single-limit liability policy with $50,000 in coverage, but that coverage was not enough to pay all claims arising out of the multiple vehicle
accident. Consequently, Colwell settled her claim against the tortfeasor for $34,473 and looked to the UIM coverage in her Allstate policy for further compensation. Allstate denied her claim, asserting that because the tortfeasor's liability policy limit was not less than Colwell's UM/UIM
limit, the tortfeasor was not underinsured within the meaning of her Allstate policy or § 941(f). In response, Colwell sought a declaratory judgment that she is entitled to UIM coverage. By joint request of the parties, the superior court certified to this Court pursuant to V.R.A.P.
5(a) the question of whether Colwell was entitled to UIM coverage under the circumstances of this case.

B. The Bonanno Case

4. On December 22, 1995, plaintiff Nicholas Bonanno was operating his employer's vehicle during a work-related activity when he was injured in an automobile accident. His employer, defendant Bell Atlantic Communications, Inc., was self insured. The driver of the vehicle who caused the accident was covered by a $500,000 liability policy. Bonanno collected workers' compensation benefits from Bell Atlantic. He also obtained a recovery under the tortfeasor's policy, but only in the amount of $62,500 because of payments made to another person rendered quadriplegic by the accident.

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full text of the Court's opinion.

In Supreme Court Docket No. 2000-053, we answer the certified question in the negative. In Supreme Court Docket No. 2000-410, we affirm the court's judgment for appellee American Protection Insurance, and we reverse the judgment in favor of appellee Bell Atlantic Communications, Inc. and remand for further proceedings consistent with this opinion.

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C.L.