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New Jersey Supreme Court Provides Clarity On Insurance Exclusion Clauses

August 11, 2022

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<p style="text-align: justify;">The New Jersey Supreme Court recently held in <em><a href="https://www.wcmlaw.com/wp-content/uploads/2022/08/Norman-International-Inc.-v-Admiral-Insurance-Company.pdf">Norman International, Inc. v Admiral Insurance Company</a>,</em> that an insured cannot claim an exclusionary clause does not apply because their product was sold to the parent company in a non-excluded zone but directed for delivery to a site in an excluded area. The Court emphasized that they must analyze the precise wording of the policy and consider the actions of the insured within the excluded zone.</p>
<p style="text-align: justify;">When considering the wording, the courts looked at the policy terms that stated, “This insurance does not apply to “bodily injury”, “property damage” or “personal and advertising injury”, including costs or expenses, actually or allegedly arising out of, related to, caused by, contributed to by, or in any way connected with. . . Any operations or activities performed by or on behalf of any insured in the Counties shown in the Schedule above [which contained the county where the injury occurred].” The court defined and focused on the phrase “in any way connected with”  and determined it was to be applied broadly and to mean that it would apply to an injury that is connected in any fashion regardless of its remoteness.</p>
<p style="text-align: justify;">With the broad interpretation of the policy, the Court then considered the actions of the insured to determine whether the injury was in any way connected with the insured. The Court held that the fact that the insured provided the machine that resulted in the injury was enough to trigger the exclusion. The court reasoned that the injury could not have occurred without the machine being provided by the insured and, therefore, the injury was connected with the insured performing an activity within the excluded zone. The court also emphasized that the insured providing training and servicing further supported the connection.</p>
<p style="text-align: justify;">The takeaway from this decision is that, in consideration of exclusionary clauses, the courts will be inclined to closely examine the wording of the policy. While ambiguity will be considered in favor of the non-drafting party, the courts will consider the words and phrases for their precise definitions.</p>
<p style="text-align: justify;">Thanks to Ryan Dame for his contribution to this article.  Should you have any questions, contact <a href="mailto:agibbs@wcmlaw.com">Andrew Gibbs</a>.</p>

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