In an eerily similar decision as the Appellate Division, Fourth Department's decision in Meegan v. Progressive Ins. Co., the New York Court of Appeals in Raffellini v. State Farm Mut. Auto. Ins. Co. held that a "serious injury" exclusion in a supplementary uninsured/underinderinsured (SUM) motorist endorsement to an automobile liability policy is enforceable (see this prior post for background of case).
The Court's decision is important for the obvious reason, but also for its discussion of the statutory framework of the Insurance Law. Equally important is the Court's discussion of the powers of regulatory agencies regarding filling in the gaps that certain legislation has left open. In Raffellini, the Court recognized that the Superintendent of Insurance's enactment of Regulation 35-D, which interpreted New York's insurance law regarding supplementary coverage.
I am seeking your opinion regarding certain questions I think this decision left open regarding SUM coverage and the "serious injury" requirement. The Court did not address the preclusive impact a finding of "serious injury" would have on a SUM insurer where the determination was made below and the tortfeasor and the injured plaintiff ultimately settled for the policy limits. Will the injured plaintiff be required to demonstrate a "serious injury" twice or will the SUM insurer (not a party to the underlying action) be bound be the "serious injury" determination? If the SUM insurer agrees to the underlying settlement or does not respond to the injured plaintiff's request to settle the underlying action, do those actions demonstrate the SUM injurer's agreement with the "serious injury" findings?
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