Exclusion Not on Declarations Page Ruled Unenforceable ‘Hidden Trap’ in New Jersey

A 3-judge New Jersey Superior Courtroom appellate panel has dominated that an intra-family legal responsibility exclusion in a Vacationers (St. Paul) auto insurance coverage coverage quantities to a “hidden pitfall” and is unenforceable as a result of it was not cited on the coverage’s declarations web page.

Whereas not discovering the exclusion itself ambiguous, the judges mentioned a “clearly worded exclusion can nonetheless perform as a hidden lure if the rest of the coverage, and notably the declarations sheet, would lead an affordable policyholder to count on completely different protection.”

The declarations sheet clearly acknowledged that plaintiff, who was severely injured as a passenger in an insured automobile pushed by her husband, had $100,000/$300,000 legal responsibility limits. Nothing on this web page referred by cross-reference or in any other case to the listing of exclusions. The plaintiff – and, the court docket famous, even the skilled claims adjuster in an preliminary misguided provide—assumed the plaintiff had a $100,000 coverage restrict; nonetheless. the step-down meant she solely had $15,000, the minimal acknowledged by New Jersey legislation.

“It by no means knowledgeable plaintiff the coverage was topic to any exclusions underneath which an insured wouldn’t be lined within the full quantity listed on the declarations pages,” the court docket acknowledged of the coverage.

The decrease Hudson County court docket decide had discovered the step-down exclusionary clause “to be patently unfair and in opposition to public coverage.”

Whereas the appellate judges didn’t rule on the exclusion itself, they did describe it as “troubling” as a result of, they mentioned, most auto coverage purchasers within the state seemingly assume that “an injured member of the family passenger in an insured auto would take pleasure in the total coverage limits bought and could be shocked to be taught in any other case.”

The judges posited that this exclusion would imply a toddler severely injured in an accident attributable to the parent-driver’s negligence might recuperate solely $15,000 in private harm damages underneath a $100,000/$300,000 coverage as on this case, whereas the kid’s good friend sitting subsequent to her and likewise severely injured might recuperate the $100,000 coverage limits.

“The step-down in protection and advantages is so opposite to the affordable expectations of the everyday auto policyholder in mild of the declarations sheet that we are going to not implement it,” the judges concluded.

The plaintiff, Cristina Dela Vega, was severely injured within the accident, exhausting the whole lot of the $250,000 private harm safety (PIP) advantages out there to her underneath the St. Paul coverage. Dela Vega testified that she consciously selected the $100,000 legal responsibility limits.

4 months after the accident, a St. Paul claims adjuster provided the plaintiff the $100,000 legal responsibility restrict on the couple’s $100,000/$300,000 coverage. 4 months later, the adjuster rescinded the provide, advising the corporate had “made an unlucky mistake” and after additional evaluation decided the coverage would solely “afford a bodily harm legal responsibility advantage of as much as $15,000, and less.”

The adjuster defined she’d provided what she “incorrectly assumed” had been the $100,000 legal responsibility limits of the coverage to settle this declare pre-suit as a result of the corporate had already paid $250,000 in PIP advantages for plaintiff’s medical therapy and “legal responsibility appeared clear.” The adjuster claimed, in making the provide, that she had relied on her “expertise adjusting auto legal responsibility claims” and hadn’t truly learn plaintiff’s coverage.

The judges commented that prior rulings made clear that insureds “shouldn’t be subjected to technical encumbrances or to hidden pitfalls and their insurance policies ought to be construed liberally of their favor to the top that protection is afforded ‘to the total extent that any honest interpretation will permit.’”

The case is Dela Vega v. The Vacationers Insurance coverage Co.