202 A.3d 627
N.J. Super. Ct. App. Div.2019Background
- In Dec. 2015 plaintiff was injured operating his Harley motorcycle and sought UIM benefits under three policies (Rider, Farmers, GEICO). He had already settled with the tortfeasor for $25,000.
- GEICO denied plaintiff’s UIM claim based on an exclusion in Section IV (UM/UIM section) excluding coverage for bodily injury sustained while occupying a motor vehicle owned by an insured that is not described in the declarations and not covered for liability under the policy.
- The trial court found GEICO’s exclusion ambiguous and not compliant with N.J.S.A. 17:28-1.1 and denied GEICO’s declaratory judgment motion. Rider and Farmers agreed to pay their pro rata shares; GEICO appealed.
- The Appellate Division reviewed contract interpretation de novo and evaluated ambiguity rules, reasonable expectations, and statutory mandates governing UM/UIM.
- The majority concluded the exclusion is clear and unambiguous as applied to UIM, does not violate public policy or the statute, and properly precludes GEICO’s UIM liability for the motorcycle owned by the insured but not listed on the GEICO declarations page. The court reversed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether GEICO’s owned-vehicle exclusion in the UM/UIM section is ambiguous | The exclusion is ambiguous and unenforceable; declarations gave no notice | Exclusion is clear and unambiguous and bars UIM for an owned vehicle not listed on declarations | Held: exclusion is clear and enforceable; reversal for GEICO |
| Whether combining UM and UIM in one section violates N.J.S.A. 17:28-1.1 and creates ambiguity | Combining them (and not distinguishing) undermines statutory UM protections and confuses insureds | The case involves only a UIM claim; combining does not render the UIM text ambiguous | Held: no statutory violation as to UIM here; combination does not make UIM language ambiguous |
| Whether failure to list the exclusion on the declarations page defeats the exclusion | Declarations page omission prevents relying on a ‘buried’ exclusion; insureds reasonably expect UIM to follow the person | Exclusions may appear elsewhere in the policy; declarations do not control when policy language is clear | Held: omission from declarations does not automatically render the exclusion ambiguous or unenforceable |
| Whether UIM coverage necessarily “follows the person” so an insured’s ownership of an uninsured vehicle cannot defeat UIM | UIM is personal coverage and should follow the insured regardless of which vehicle he occupies | Policy may lawfully condition UIM coverage via clear, unambiguous terms (e.g., excluding owned-but-unlisted vehicles) | Held: UIM need not be treated as per se vehicle-agnostic where policy language clearly conditions coverage; the exclusion is permissible |
Key Cases Cited
- Zacarias v. Allstate Ins. Co., 168 N.J. 590 (clarity of policy language governs; interpret plain meaning)
- Universal Underwriters Ins. Co. v. New Jersey Mfrs. Ins. Co., 299 N.J. Super. 307 (UIM follows insured; declaration-page expectations relevant when ambiguity exists)
- Aubrey v. Harleysville Ins. Cos., 140 N.J. 397 (UIM characterized as personal coverage that follows the insured)
- Longobardi v. Chubb Ins. Co. of N.J., 121 N.J. 530 (courts should not engage in strained constructions to impose liability; interpret exclusions narrowly)
- Magnifico v. Rutgers Cas. Ins. Co., 153 N.J. 406 (Supreme Court emphasized the role of clear policy language in resolving UIM coverage disputes)