(f)

(1) No policy insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any natural person arising out of the ownership, maintenance and use of a motor vehicle or an altered motor vehicle commonly referred to as a “stretch limousine” having a seating capacity of eight or more passengers used in the business of carrying or transporting passengers for hire, by the insured shall be issued or delivered by any authorized insurer upon any motor vehicle or an altered motor vehicle commonly referred to as a “stretch limousine” having a seating capacity of eight or more passengers used in the business of carrying or transporting passengers for hire, then principally garaged or principally used in this state unless it contains a provision whereby the insurer agrees that it will pay to the insured, as defined in such provision, subject to the terms and conditions set forth therein to be prescribed by the board of directors of the Motor Vehicle Accident Indemnification Corporation and approved by the superintendent, all sums, not exceeding a maximum amount or limit of twenty-five thousand dollars exclusive of interest and costs, on account of injury to and all sums, not exceeding a maximum amount or limit of fifty thousand dollars exclusive of interest and costs, on account of death of one person, in any one accident, and the maximum amount or limit, subject to such limit for any one person so injured of fifty thousand dollars or so killed of one hundred thousand dollars, exclusive of interest and costs, on account of injury to, or death of, more than one person in any one accident, which the insured or his legal representative shall be entitled to recover as damages from an owner or operator of an uninsured motor vehicle, unidentified motor vehicle which leaves the scene of an accident, a motor vehicle registered in this state as to which at the time of the accident there was not in effect a policy of liability insurance, a stolen vehicle, a motor vehicle operated without permission of the owner, an insured motor vehicle where the insurer disclaims liability or denies coverage or an unregistered vehicle because of bodily injury, sickness or disease, including death resulting therefrom, sustained by the insured, caused by accident occurring in this state and arising out of the ownership, maintenance or use of such motor vehicle. No payment for non-economic loss shall be made under such policy provision to a covered person unless such person has incurred a serious injury, as such terms are defined in section five thousand one hundred two of this chapter. Such policy shall not duplicate any element of basic economic loss provided for under article fifty-one of this chapter. No payments of first party benefits for basic economic loss made pursuant to such article shall diminish the obligations of the insurer under this policy provision for the payment of non-economic loss and economic loss in excess of basic economic loss. Notwithstanding any inconsistent provisions of section three thousand four hundred twenty-five of this article, any such policy which does not contain the aforesaid provisions shall be construed as if such provisions were embodied therein.

The purpose of the endorsement was to help effectuate the scheme of compulsory automobile liability insurance that has prevailed in New York State for the past quarter of a century by providing coverage to insured persons who suffer automobile accident injuries at the hands of financially irresponsible motorists (Ackerman v. MVAIC, 36 Misc.2d 1048, 234 N.Y.S.2d 303, affd. 18 A.D.2d 307, 239 N.Y.S.2d 463). The aim, to make the prescribed compensation available in All such cases, would appear to call for a policy of inclusion rather than exclusion in determining whom it covers (e. g., Matter of Neals v. Allstate Ins. Co., 34 A.D.2d 265, 311 N.Y.S.2d 315).

Significantly, although the endorsement itself is silent, the principal Insurance Law provisions from which it is derived confirm this policy as it applies to motorcycles. Under subdivision 2-a of section 167, each automobile liability policy must contain an endorsement making payable to an insured certain amounts "as damages from an owner or operator of an uninsured Motor vehicle ". (Italics supplied.) And, according to subdivision a of section 601, "motor vehicle" encompasses "motorcycle". It is difficult to ascribe any reason for watering down the reach of the word "automobile" as it is used in the endorsement from what was intended by the phrase "motor vehicle" in the statute that forms the Raison d'etre for the endorsement.

Insurance Law § 3420(f)(1) requires every motor vehicle insurance policy to contain an uninsured motorist endorsement under which the insurer agrees that it will pay to an insured any damages caused by an owner or operator of an uninsured motor vehicle, a stolen vehicle and a motor vehicle [77 N.Y.2d 640] operated without permission of the owner. "The purpose of the endorsement [is] to help effectuate the scheme of compulsory automobile liability insurance * * * by providing coverage to insured persons who suffer automobile accident injuries at the hands of financially irresponsible motorists" (Matter of Country-Wide Ins. Co. v. Wagoner, 45 N.Y.2d 581, 586, 412 N.Y.S.2d 106, 384 N.E.2d 653). Thus, the statutorily required endorsement is remedial in nature and should be liberally construed to afford a person injured in an accident involving an uninsured driver the same protection that such a person would have had if involved in an accident caused by a legally insured motorist (see, Matter of Knickerbocker Ins. Co. [Faison], 22 N.Y.2d 554, 558, 293 N.Y.S.2d 538, 240 N.E.2d 34, cert. denied 393 U.S. 1055, 89 S.Ct. 692, 21 L.Ed.2d 696; Matter of Neals v. Allstate Ins. Co., 34 A.D.2d 265, 266, 311 N.Y.S.2d 315). Additionally, Utica Mutual's endorsement must be construed as if all the "provisions [of Insurance Law § 3420(f)(1)] were embodied therein" (Insurance Law § 3420[f][1].

Plaintiff was injured when the motor vehicle in which he was a passenger was forced off the road by an unidentified vehicle, and he commenced this action seeking to recover supplementary uninsured/underinsured motorist (SUM) benefits under the insurance policy issued to the driver of the vehicle in which he was a passenger. Supreme Court properly granted defendant's pre-answer motion to dismiss the complaint. In support of the motion, defendant contended that, because plaintiff did not recover damages from the driver of the

[41 A.D.3d 1245]

unidentified vehicle, he is not entitled to seek SUM coverage but, rather, is in actuality seeking uninsured motorist (UM) coverage. Defendant further contended that, pursuant to the terms of its policy, arbitration of a dispute with respect to the amount owing under either the UM coverage or the SUM coverage is mandatory. We agree (see Mahmood v Fidelity & Guar. Ins. Co., 303 AD2d 385 [2003]; Cacciatore v New York Cent. Mut. Fire Ins. Co., 301 AD2d 253, 254-256 [2002]). Contrary to the contention of plaintiff, he is not entitled to a jury trial. "[J]ury trials are not mandated in all civil trials since the [NY] Constitution provides that such right may be waived ... and ... such waiver is effected by a consent to arbitration" (Matter of Ball [SFX Broadcasting], 236 AD2d 158, 162 [1997], appeal dismissed 91 NY2d 921 [1998], lv denied 92 NY2d 803 [1998]). Here, plaintiff is seeking coverage as an insured person under the policy, and the mandatory arbitration provision applies to all insureds. In any event, we further note that plaintiff is a third-party beneficiary of the insurance policy, and it is well settled that "[a] third party is entitled only to those rights which the original parties to the contract intended the third party to have" (Leavitt-Berner Tanning Corp. v American Home Assur. Co., 129 AD2d 199, 203 [1987], lv denied 70 NY2d 609 [1987]).

[*278] [**186]  Order, Supreme Court, Bronx County (Lucy Billings, J.), entered on or about October 5, 2007, which denied the petition to stay arbitration of respondent's uninsured motorist (UM) benefits claim and dismissed the proceeding, unanimously reversed, on the law, without costs, and the petition granted.

Respondent, who was injured while a passenger in a motor vehicle, owned and operated by Chambers, involved in a hit-and-run  [*279]  accident, received a settlement payment of $25,000, based on the liability of the driver, insured by petitioner, for his own negligence. Respondent then sought to arbitrate a claim for a similar amount, which was the limit of the uninsured motorist coverage of the vehicle, based on the responsibility of the unidentified hit-and-run driver. Petitioner insurer sought to stay arbitration on the ground that any recovery based on uninsured motorist benefits (to a limit of $25,000) is offset by the $25,000 respondent has already recovered  [***2] for this same injury. Respondent's demand for arbitration clearly refers to the policy issued to driver Chambers. However, the only policy included in the record, in this proceeding to stay arbitration, is a separate policy issued by petitioner to the injured respondent passenger himself, in which respondent purchased supplemental uninsured/underinsured (SUM) coverage, and the court appears to have denied the petition to stay arbitration on the ground that petitioner failed to make a sufficient showing that recovery under the Chambers policy precludes recovery under the SUM provision of the policy issued to respondent.

Since respondent received $25,000 in settlement of his claimed injuries, any potential UM claim under either the Chambers policy or a SUM claim under respondent's own policy was offset by the prior settlement payment (see Matter of Metropolitan Prop. & Cas. Ins. Co. v Barriga, 281 AD2d 200, 727 NYS2d 304 [2001]). Sufficient evidence was presented to the court to make such  [****2]  determination, inasmuch as there was no dispute as to the existence and terms of the Chambers policy or the amount of payment of the settlement in the underlying action.

The protection provided by this article shall not apply to any cause of action by a qualified person arising out of a motor vehicle accident occurring in this state against a person whose identity is unascertainable, unless the bodily injury to the qualified person arose out of physical contact of the motor vehicle causing the injury with the qualified person or with a motor vehicle which the qualified person was occupying (meaning in or upon or entering into or alighting from) at the time of the accident.

The Motor Vehicle Accident Indemnification Corporation Act (Insurance Law art. 52) was enacted for the purpose of "securing to innocent victims of motor vehicle accidents recompense for the injury and financial loss inflicted upon them" (Insurance Law § 5201[b]; see also, Matter of Smith [Great Am. Ins. Co.], 29 N.Y.2d 116, 324 N.Y.S.2d 15, 272 N.E.2d 528, supra; Motor Vehicle Acc. Indemnification Corp. v. Eisenberg, 18 N.Y.2d 1, 271 N.Y.S.2d 641, 218 N.E.2d 524). To further this purpose, the act requires insurance protection for persons injured or killed in motor vehicle accidents involving hit-and-run vehicles (see, Insurance Law §§ 5201, 5217). Such accidents, [78 N.Y.2d 328] however, are susceptible to fraud and collusion because they are "easy to allege and difficult to disprove" (see, MVAIC v. Eisenberg, supra, at 4, 271 N.Y.S.2d 641, 218 N.E.2d 524). Thus, to deter the prosecution of fictitious claims, the Legislature imposed a "physical contact" requirement for all "hit-and-run" accidents (see, Insurance Law § 5217 [formerly § 617]; Matter of Smith [Great Am. Ins. Co.], supra, 29 N.Y.2d at 118, 324 N.Y.S.2d 15, 272 N.E.2d 528; MVAIC v. Eisenberg, supra, 18 N.Y.2d at 4, 271 N.Y.S.2d 641, 218 N.E.2d 524).

The "physical contact" language was first interpreted by this Court in MVAIC v. Eisenberg (supra), a case in which an unidentified vehicle struck another and propelled it into claimant's vehicle. We held that the "contact" required by the statute could be indirect provided there was sufficient evidence to prove that the accident resulted from impact with an unidentified vehicle. The Court returned to the subject in Matter of Smith (supra). In that case, the claimant sought recovery for damages sustained when ice and snow, which he alleged had been disengaged from an unidentified vehicle, struck his automobile and caused an accident. We held that contact with cast-off ice and snow was not sufficient to constitute physical contact and stated that "the kind of contact required by the statute, even if not direct, must at least originate in collision." (Matter of Smith [Great Am. Ins. Co.], supra, 29 N.Y.2d at 119, 324 N.Y.S.2d 15, 272 N.E.2d 528.) We explained that:

"physical contact as contemplated by the statute may involve * * * the continued transmission of force indirectly and simultaneously through an intermediate agency, but the initial impact must * * * be that of a collision between the unidentified vehicle with the claimant, the vehicle occupied by him, an obstruction or other object causing the bodily injury." (Matter of Smith [Great Am. Ins. Co.], supra, at 119, 324 N.Y.S.2d 15, 272 N.E.2d 528.)

Insofar as claimant Smith failed to prove physical contact, as measured by that test, we stayed arbitration (see, Matter of Smith [Great Am. Ins. Co.], supra, at 122, 324 N.Y.S.2d 15, 272 N.E.2d 528).

Had the decision ended there, the courts might well have dismissed the petition in this case and directed the parties to proceed to arbitration. But the Smith court went on to explain the importance of requiring "collision" as a prerequisite to a finding of "physical contact" because collision increased the probability that the offending vehicle was operated negligently and decreased the probability that the claim was fictitious. It noted, however, that, as a result of this requirement, there [78 N.Y.2d 329] may be instances where negligently caused accidents by hit-and-run vehicles will be excluded from coverage. "Good

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[580 N.E.2d 401] examples of such negligently caused accidents, and yet not covered by the statute", it stated "would be those caused by objects cast off or falling from a speeding or insecurely laden hit-and-run vehicle itself, such as parts of the vehicle" (Matter of Smith [Great Am. Ins. Co.], supra, at 120, 324 N.Y.S.2d 15, 272 N.E.2d 528 [emphasis added].

Understandably, a number of courts have relied upon this language to bar recovery for injuries caused when parts of a vehicle strike the insured or the insured's vehicle (see, e.g., Matter of Soto v. Motor Vehicle Acc. Indemnification Corp., 140 A.D.2d 223, 528 N.Y.S.2d 543 [pedestrian struck by hubcap dislodged from unidentified vehicle]; Matter of Diaz v. Motor Vehicle Acc. Indemnification Corp., 82 A.D.2d 749, 440 N.Y.S.2d 13 [same]; Matter of Utica Mut. Ins. Co. v. Spenningsby, 133 A.D.2d 765, 520 N.Y.S.2d 163 [rear relief spring from an unidentified truck struck driver's windshield, causing him to lose control and collide with another vehicle]. Indeed, in a claim involving facts indistinguishable from those presented today, a sharply divided Appellate Division denied arbitration because the majority believed itself constrained by the dicta in Smith (supra) (see, Government Employees Ins. Co. v. Goldschlager, 44 A.D.2d 715, 355 N.Y.S.2d 9). The holding does not require that result, however, and we take this opportunity to clarify the governing rule: "physical contact" occurs within the meaning of the statute, when the accident originates in collision with an unidentified vehicle, or an integral part of an unidentified vehicle.

It is clear that the burden was met in the present case. The evidence, though circumstantial, was strong. Five independent witnesses recounted various details to establish that an unidentified [78 N.Y.2d 330] vehicle traveling east on the Long Island Expressway lost a wheel and that the tire and its rim traveled across the median and struck Killakey's westbound vehicle. Witnesses also heard the assembly of the missing wheel scraping on the pavement, observed the vehicle come to a stop in the eastbound lane to mount the spare, and then disappear before the police arrived without the driver identifying himself. From this evidence, the court below found as a fact that "[t]he tire that struck Mrs. Killakey came off an unidentified vehicle" and that "[t]he sole cause of injury and death was the wheel and tire" which had been propelled into her vehicle. In view of these findings, respondent has satisfied the "physical contact" requirement of the policy, i.e., that the claim "originate[d] in collision" with an unidentified vehicle, and arbitration is not foreclosed merely because the tire and the rim had separated from the vehicle moments before, bounded across the median and crashed into decedent's car.

[...]

[580 N.E.2d 402] Accordingly, the order of the Appellate Division should be reversed, with costs, and petitioner's motion to stay arbitration denied.

The issue, in this proceeding to stay arbitration, is whether there was physical contact between an unidentified vehicle and the injured claimant's automobile as contemplated by the Accident Indemnification Law (Insurance Law, Consol.Laws, c. 28, § 617). An unidentified tractor-trailer combination approached claimant's automobile from an opposite direction. Snow and [272 N.E.2d 529] ice were dislodged from the tractor-trailer, striking and shattering claimant's [29 N.Y.2d 118] windshield and thus causing the injuries. Special Term, 62 Misc.2d 1015, 310 N.Y.S.2d 762, and the Appellate Division, 35 A.D.2d 233, 315 N.Y.S.2d 388, allowed the arbitration. There should be a reversal, because there was no physical contact as contemplated by the statute.

[...]

If the analysis, application, and illustrations in the Eisenberg case are considered, it is readily evident that the kind of contact required by the statute, even if not direct, must at least originate in collision. Thus, physical contact as contemplated by the statute may involve, it is true, the continued transmission of force indirectly and simultaneously through an intermediate agency, but the initial impact must, nevertheless,[272 N.E.2d 530] be that of a collision between the unidentified vehicle with the claimant, the vehicle occupied by him, an obstruction or other object causing the bodily injury. Excluded, therefore, are objects cast off or cast up by the hit-and-run vehicle, whether it be ice accumulated on the vehicle or pebbles or rocks or other debris on the roadway surface. Every transmission of force by a moving vehicle is not a

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collision, and the statute is concerned only with an initial collision by the unidentified vehicle with someone or something, and then a continued transmission of the colliding force with the injured person.

Several purposes are thus served. The kind of damage sustained by claimant or his automobile, or by the intermediate object, is more likely to evidence the existence of the unidentified hit-and-run vehicle and that it was the cause of the accident [29 N.Y.2d 120] (MVAIC v. Eisenberg, 18 N.Y.2d 1, 5, 271 N.Y.S.2d 641, 644, 218 N.E.2d 524, 526, Supra). The definitional extension of the word 'contact' in the controlling statute is not expanded beyond ordinary meaning; indeed, the only extension is not to limit contact to direct contact, a limitation not expressed in the statute. Perhaps most important, but in any event very important, is that requiring collision by the unidentified vehicle to initiate the sequence of physical events resulting in bodily injury, assures much greater probability that the offending vehicle was being operated negligently. There is only minimal probability in the great range of such accidents that the automobile operator's negligence caused ice to accumulate on his vehicle or to become dislodged, and it is only a little more probable that negligent driving caused pebbles, rocks, dust, or other debris to be cast up by the vehicle's wheels. In the rare case where negligence may be responsible for the accident, then there is no indemnification under the statute. Good examples of such negligently caused accidents, and yet not covered by the statute, would be those caused by objects cast off or falling from a speeding or insecurely laden hit-and-run vehicle itself, such as parts of the vehicle or its load. And this is hardly surprising, for in requiring physical contact with the offending vehicle to base responsibility under the statute the legislative purpose is evident; some negligently caused accidents are to be excluded or else the requirement of physical contact performs no function whatever. The reason for the exclusion is sufficiently developed in the opinion in the Eisenberg case; it is to deter fictitious claims, too easily contrived in the absence of physical contact.

Finally, the impulse to read the statute liberally and to effect its purpose must be limited by the language used. In statutory construction, purpose may permit a broad and even an unusually broad rendering of the statutory language. But purpose cannot be a warrant to go beyond the language used. The language is a limitation on construction even as the purpose may be a liberalizing factor (cf., e.g., Lanvin Parfums v. Le Dans, Ltd., 9 N.Y.2d 516, 521, 215 N.Y.S.2d 257, 259, 174 N.E.2d 920, 921; Bright Homes v. Wright, 8 N.Y.2d 157, 161--162, 203 N.Y.S.2d 67, 69--71, 168 N.E.2d 515, 517--518; see, also, McKinney's Cons. Laws of N.Y., Book 1, Statutes, § 111, at pp. 230--232). The two factors must be accommodated. The Eisenberg case by its rule permitting physical contact with the offending

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vehicle to include indirect contact was a liberating [29 N.Y.2d 121] influence. ^* But the indirect contact, a broad construction in itself, cannot be then used again as a starting point to cover any indirect causation however convoluted, reducing the 'contact' part of the statutory term to a nullity. Obviously most accidents have some physical beginning and the harm is almost always a physical consequence. [272 N.E.2d 531] The point is that between the two there must be a closer and more substantial physical nexus either in a single collision or in connected collisions.

Unfocused forces, whether produced by centrifugal force or ricochet, set off by a moving vehicle do not provide the kind of physical nexus contemplated by the statute nor understood in common parlance to constitute physical contact with the vehicle itself. On the other hand, common understanding does embrace within physical contact the limited indirect contact by collision through inert or inactive intermediate solid objects, as discussed in the Eisenberg case. The point also is that, as a matter of statutory construction, physical contact requires a narrower category of cause than would be understood in tort law as proximate cause, or again the statutory limitation would have no meaning. (For an excellent analysis, see Note: 20 So.Car.L.Rev. 790, in which the ramifications of the rule in the Eisenberg case are discussed.)

The issue involved here has troubled other courts and as may be expected there have been divergent conclusions (see Ann., Hit-and-Run Vehicle--Physical Contact, 25 A.L.R.3d 1299, esp. at pp. 1304--1305, Supra; Notman, Study of Uninsured Motorist Endorsement, 43 Notre Dame Lawyer, 5, 10--13; Aksen, Uninsured Motorist Claims, 24 Ohio St.L.J. 589, 602; Chadwick and Poche, Uninsured Motorists, 13 Hastings L.J. 194, 197--198; Note: 29 Brooklyn L.Rev. 286, 294--295; Comment: 42 Tulane L.Rev. 352, 364--365). It is not an issue easy to resolve or a test easy to apply. Nor may one be confident that any verbal formulation, however precise one might wish to make it, could or would embrace every conceivable combination of events which may arise. The goal is to accord every liberal extension to the remedial statute but not to the point of judicially removing [29 N.Y.2d 122] the meaning and frustrating the purpose of limiting language deliberately inserted into the statute (e.g., Fontheim v. Third Ave. Ry. Co., 281 N.Y. 392, 394, 24 N.E.2d 95, 96; 56 N.Y.Jur., Statutes, §§ 109, 168; see, also, Id. § 229).

On October 20, 1984, the plaintiff was involved in an automobile collision with a vehicle driven by an unknown man. The plaintiff was not injured as a result of the collision. However, after both the plaintiff and the other driver exited their respective vehicles, the plaintiff was shot with a handgun by the other driver who then fled and was never found. [127 A.D.2d 747] The plaintiff sought first-party benefits and uninsured motorist benefits pursuant to a policy issued by the defendant insurer. When the defendant disclaimed, the plaintiff instituted this action which Special Term dismissed upon the defendant's motion for summary judgment.

The plaintiff was not entitled to first-party benefits because his injuries did not arise from the "use or operation" of the automobile (see, Matter of Manhattan & Bronx Surface Tr. Operating Auth. [Gholson], 71 A.D.2d 1004, 420 N.Y.S.2d 298, quoting from Insurance Law former § 671[2], [now § 5102(b)]). His claim for benefits under the uninsured motorist endorsement was also properly denied because his injuries were not caused by an accident (see, McCarthy v. Motor Vehicle Acc. Ind. Corp., 16 A.D.2d 35, 224 N.Y.S.2d 909, affd. 12 N.Y.2d 922, 238 N.Y.S.2d 101, 188 N.E.2d 405) and the injuries did not arise from the physical contact between the vehicles (see, Matter of Smith [Great Amer. Ins. Co.], 29 N.Y.2d 116, 324 N.Y.S.2d 15, 272 N.E.2d 528).