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Nationwide’s denial of UM/SUM claim questioned in subway moped case. Nationwide Gen. Ins. Co. v. Faulkner 2024 N.Y. Slip Op. 30985 (N.Y. Sup. Ct. 2024)


In a recent legal proceeding under CPLR 7503, Nationwide General Insurance Company sought a permanent stay of arbitration concerning the injured’s claim for uninsured motorist (UM)/supplementary underinsured motorist (SUM) benefits. Faulkner, the injured, contested the petition. Faulkner alleged she sustained injuries on November 15, 2022, from a hit-and-run moped incident at the New York City subway’s Times Square station, leading to a denial of her claim under John C. Faulkner’s Nationwide policy.

In New York, Uninsured Motorist benefits provide coverage to policyholders when they are involved in an accident caused by an uninsured or hit-and-run driver. This coverage helps pay for medical expenses, lost wages, and other damages that result from the accident. UM benefits are important as they ensure that victims of accidents with uninsured drivers can still receive compensation for their losses, despite the at-fault driver’s lack of insurance.

Supplementary Underinsured Motorist benefits in New York extend coverage beyond the limits of the at-fault driver’s insurance policy. If the at-fault driver’s insurance coverage is insufficient to cover the full extent of the victim’s damages, SUM benefits can provide additional compensation up to the limits of the policyholder’s SUM coverage. This coverage becomes important in cases where the damages exceed the limits of the at-fault driver’s insurance, ensuring that victims receive adequate compensation for their injuries and losses.

Background Facts
On November 15, 2022, Brittany Faulkner encountered a hit-and-run moped incident at the Times Square station of the New York City subway. The collision, causing Faulkner to lose consciousness and sustain injuries to her face and head, prompted her admission to Bellevue Hospital. Despite the NYPD’s report confirming the moped’s involvement, Nationwide denied her claim for UM/SUM benefits in a letter dated March 16, 2023.  Nationwide denied Faulkner’s claim for UM/SUM benefits because their investigation concluded that the moped involved in the incident did not qualify as a motor vehicle under the terms of the insurance policy issued to John C. Faulkner. According to Nationwide, the lack of proof that the moped or scooter met the definition of a motor vehicle meant that the incident did not trigger coverage under the policy. Despite Faulkner’s demand for arbitration to settle the claim, Nationwide maintained its position that the vehicle involved did not fall within the policy’s definition of an uninsured motor vehicle, leading to the dispute and subsequent legal proceedings.

Whether Faulkner’s injuries from the moped incident qualified for coverage under Nationwide’s UM/SUM policy, given the insurer’s denial citing lack of proof that the moped constituted an uninsured motor vehicle.

The court denied Nationwide’s petition for a stay of arbitration and directed the parties to proceed with arbitration of Faulkner’s UM/SUM claim. This decision rejects Nationwide’s contention that Faulkner’s injuries did not meet the policy’s definition of an uninsured motor vehicle, based on the nature of the vehicle involved in the incident.

The court’s decision to deny Nationwide’s petition for a stay of arbitration and to direct the parties to proceed with arbitration of Faulkner’s UM/SUM claim was based on several key legal principles. Firstly, the court emphasized the broad interpretation of insurance coverage in favor of policyholders, particularly in cases of ambiguity or uncertainty in policy language. It cited precedent that any ambiguity in insurance policies should be construed against the insurer and in favor of coverage for the insured party.

Specifically, the court highlighted the definition of an “uninsured motor vehicle” under the insurance policy, which included vehicles where the owner and operator cannot be identified, such as in hit-and-run incidents. Despite Nationwide’s argument that the moped involved did not meet the criteria of a motor vehicle under the policy, the court found that the policy’s definition of an uninsured motor vehicle was broad enough to encompass the circumstances of Faulkner’s accident.

Moreover, the court pointed out that Nationwide failed to provide sufficient evidence to conclusively establish that the moped did not qualify as a motor vehicle as defined in the policy. Without clear evidence to support its denial of Faulkner’s claim, the court concluded that the insurer had not met its burden to justify denying coverage.

If you’re facing challenges with an insurance claim or arbitration related to a motor vehicle accident in New York, it’s important to seek guidance from a seasoned legal professional. Contact Stephen Bilkis & Associates today to discuss your case and ensure your rights are protected in navigating complex insurance disputes.

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