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New Jersey’s Evolving Law For UIM Coverage (NJ)

August 8, 2019

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<p style="text-align: justify;">The New Jersey Supreme Court recently granted certification in a case that will ask the Court to decide whether an insurer may exclude underinsured motorist coverage (UIM) for an accident involving a vehicle owned by the insured, but not covered under the subject policy.</p>
<p style="text-align: justify;">In<em> <a href="https://www.wcmlaw.com/wp-content/uploads/2019/08/Katchen-v.-GEICO.pdf">Katchen v. GEICO</a></em>, the insured was injured in a motorcycle accident.  Prior to settling his case, the insured submitted his claim to GEICO for UIM coverage.  The GEICO policy provided coverage for bodily injury that the insured was entitled to recover from the owner of an “underinsured motor vehicle”, but excluded coverage for "bodily injury sustained by an insured while occupying a motor vehicle owned by an insured and not described in the [d]eclarations and not covered by the Bodily Injury and Property Damage liability coverages of [the] policy."  Because the motorcycle was not listed on the declarations page, GEICO disclaimed coverage on the basis that it was not an “owned auto,” defined in the policy as a "vehicle described in this policy for which a premium charge is shown for these coverages."</p>
<p style="text-align: justify;">The insured argued that the exclusion was inapplicable for multiple reasons.  First, he argued that the failure to define "motor vehicle" results in an ambiguity as to the difference between "autos" and "motor vehicles.”  The court rejected this argument and found that a plain and ordinary reading of the exclusion demonstrated that a motorcycle was a motor vehicle, and any alternate conclusion would be a “strained construction”.   Further, the exclusion appeared in the UIM section of the policy.  Thus, unlike cases where a provision in the liability section of the policy were found not to apply to the UIM coverage, the court found that the exclusion could apply because it constituted a “clearly-worded UIM provision.”  Finally, rejecting the insured’s arguments that UIM coverage cannot be tied to a specific vehicle, the Court noted that the exclusion would not apply to vehicles driven by the insured but not owned by the insured, such as a rental vehicle.  Accordingly, the court concluded there was no coverage under the policy.  Subsequently, the insured appealed this ruling to the New Jersey Supreme Court, which has recently granted certification.</p>
<p style="text-align: justify;">The New Jersey Supreme Court’s future ruling on this matter will add yet another layer into the evolving law of UIM coverage in New Jersey.   Stay tuned to see how the Court rules.</p>
<p style="text-align: justify;">Thanks to Doug Giombarrese for his contribution to this post.  Please email <a href="mailto:chayes@wcmlaw.com">Colleen E. Hayes</a> with any questions.</p>

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