UM/UIM Coverage Not Available if Other Insurance Available for Equal Limits

Insured Not Allowed to Double Dip by Means of UIM Coverage

It seems to litigants that available insurance is never enough to indemnify an injured plaintiff. As a result, even when there is probably no coverage after collecting from a responsible party, litigation against an insurer – hoping that charges of bad faith – will compel an insurer to offer a substantial settlement to avoid litigation costs. That scheme works often, but not always.

In Lisa Falk v. Kevin Donovan, Michael Donovan, and Allstate New Jersey Property & Casualty Insurance Company,  and United Services Automobile Association, Docket No. A-4236-18T4, Superior Court Of New Jersey Appellate Division (May 22, 2020) United Services Automobile Association (USAA) appealed from an order of the Law Division, which found that plaintiff was entitled to underinsured motorist (UIM) benefits under USAA’s auto insurance policy up to the policy limits of $500,000.


The dispute arose from a collision that occurred on November 21, 2015. On that date, plaintiff was operating an automobile owned by Dennis Hall, who was then plaintiff’s fiancé. At the time, Kevin Donovan was operating an automobile, apparently with the consent of Michael Donovan, the owner of the car. Donovan’s vehicle struck the rear of the car plaintiff was driving and plaintiff sustained personal injuries.

Donovan’s vehicle had insurance coverage with bodily injury limits of $100,000 under a policy issued by Plymouth Rock Assurance. Plaintiff was insured under an automobile insurance policy issued by Allstate Insurance Company (Allstate), which provided uninsured motorists (UM) and UIM coverage with policy limits of $100,000. Hall’s automobile was insured by USAA with coverage of up to $500,000. The USAA policy provided UM and UIM coverage, subject to certain limitations.

Plaintiff sued Kevin and Michael Donovan, alleging she was injured as a result of Kevin’s negligent and careless operation of the motor vehicle. She later amended her suit and added a claim against Allstate for UIM coverage under her auto insurance policy and against USAA for UIM coverage under Hall’s policy.

USAA filed a motion for summary judgment seeking a declaration that plaintiff is not entitled to UIM coverage under its policy. USAA argued that if plaintiff is deemed to be a “covered person” under the policy, the step-down provision in the policy applies and reduces her maximum recovery of UIM benefits to the amount of UIM coverage available under her Allstate policy.

Plaintiff and USAA consented to the entry of a final judgment awarding plaintiff $400,000 in UIM benefits. The judgment preserved USAA’s right to appeal the trial court’s orders denying its motion for summary judgment and granting plaintiff’s motion for partial summary judgment. USAA’s appeal followed.


On appeal, USAA argued the motion judge erred by finding that plaintiff was entitled to UIM coverage under its policy. Under New Jersey laws governing auto insurance, UIM coverage is discretionary. When interpreting an insurance policy, the appellate court must give the policy’s words their plain, ordinary meaning. If the terms of the policy are clear, it enforces those terms as written. However, if the policy’s provisions are ambiguous, the appellate court will construe those provisions against the insurer and in favor of the insured to give effect to the insured’s reasonable expectations.

Part C of the standard USAA policy is titled “UNINSURED MOTORISTS COVERAGE (referred to as UM).” Notwithstanding that title, Part C applies to both UM and UIM coverage. Furthermore, the amendments to the standard policy only changed certain provisions of Part C, and the amendments include provisions pertaining to both UM and UIM coverage.

The appeals court concluded that the other insurance provision of Part C of the USAA policy, as amended, applied to plaintiff’s UIM coverage and that coverage is limited to the $100,000 provided under her auto insurance policy. Because plaintiff’s UIM coverage under the USAA policy is not greater than the $100,000 coverage available to her under Donovan’s policy, she was not entitled to any UIM benefits under the USAA policy.


Individuals, their lawyers and courts dealing with insurance coverage issues must read the entire policy when interpreting its applicability to a fact situation. In this case, although the Plaintiff had the right to the USAA UIM coverage since she had $100,000 in coverage from her Allstate policy she was not entitled to double that coverage from the USAA policy that limits its UIM coverage to amounts of other insurance available to the insured lest than its available limits.

© 2020 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at and

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 52 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

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