In a surprising decision, the Appellate Division has rewritten the common knowledge of UIM practice by ruling that there is no requirement that a UIM claimant prove that he has suffered a serious injury " even though the regulations say so.

The plaintiff had been injured in an auto accident and sued the adverse driver, whose insurer had tendered its $25,000 policy. As the plaintiffs policy with State Farm had liability limits of $100,000, the adverse driver was underinsured by definition. State Farm rejected plaintiffs UIM claim on the grounds that he did not meet the no-fault serious injury threshold.

Supreme Court held that the fact that the adverse drivers insurer tendered its policy proved that the plaintiff had met the threshold.

The Appellate Division held that, even though Regulation 35-d, enacted by the New York State Insurance Department in 1992, contains the provision that applicants for SUM coverage (which includes both UM and UIM) sustain a serious injury [11 NYCRR 60-2.3(f)], that regulation was not authorized by Insurance Law 3420(f)(2).

Unlike Insurance Law 3420(f)(1), which governs basic UM claims and claims against MVAIC, held the court, Insurance Law 3420(f)(2), which governs SUM claims, does not similarly contain the threshold requirement. Therefore, concluded the court, the Insurance Department exceeded its authority when it wrote the serious injury threshold into the SUM regulation.

As a result, in the Second Department, insurers may no longer require UIM claimants to prove they meet the serious injury threshold.

Raffellini v. State Farm Mutual Auto. Ins. Co., NYLJ 11/01/06 (2d Dept 2006)