NJ Court Holds Statutory Insurance Minimums Supersede Stated Policy Coverage Limits
The matter of Rafanello v. Taylor-Esquivel arose out of a multi-vehicle accident involving a commercial dump truck operated by Jorge Taylor-Esquivel and under the control of his employer, NAB Trucking (the truck was leased). Esquivel, however, was not listed in the Covered Driver’s section of NAB’s liability policy. The trial court determined that NAB’s exposure was capped at $35,000 which, in the court’s view, was the maximum liability limit pursuant to the policy which was clear and unambiguous. The policy at issue was underwritten by American Millennium Insurance Company (AMIC).
Plaintiff’s auto insurer, Encompass, filed a third-party action against AMIC to recover underinsured motorist benefits it paid to plaintiff Rafanello, who was injured as a result of Esquivel’s alleged negligence. The trial court granted summary judgment in favor of AMIC and dismissed the third-party claim, finding that the policy’s plain terms mandated that coverage be reduced to $35,000.
However, the Appellate Division reversed. On appeal, the Court found that where the Legislature had adopted a separate statutory scheme for a class of motor vehicles and did not specify the amount of compulsory liability insurance coverage required, it had delegated that authority to the Commissioner of Insurance in consultation with the Director of the Division of Motor Vehicles. These regulating agencies had adopted federal statutes and regulations into its own regulatory scheme for a specific class of motor vehicle. The Appellate Division found that the subject dump truck was transporting hazardous materials and was therefore a vehicle governed by a specific NJ statutory scheme that incorporated Federal law through interpreting regulations. Thus, since Federal law required interstate trucking companies to provide liability limits of $750,000 for any commercial interstate vehicle weighing more than 10,001 pounds, the AMIC policy had to conform to those requirements and provide the statutory minimum in insurance coverage.
This case illustrates the importance of knowing state and federal statutory insurance minimums, as a policy’s stated coverage limits may be called into question when there is conflicting statutory insurance minimums required for certain vehicles.
Thanks to Mike Noblett for his contribution to this post. If you have any questions or comments, please contact Colleen Hayes.