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NJ: Insurance "Step Down" Provision Upheld

November 18, 2009

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A clause in an insurance policy that reduced the available policy limit for a truck driver who was not named within the policy’s “Schedule of Reported Drivers” from $500,000 to the minimal statutory amount of $15,000 was upheld where the policy language was clear and unambiguous. Although the Court commented upon the substantial injuries sustained by the plaintiff who jumped from a moving train when it collided with a Freightliner truck, it concluded that sympathy for the plaintiff could not override the clear and unambiguous policy term.
Finding the policy term clear, the court held the policy holder to the term as written despite an argument that he may not have understood it due to a language difficulties. Additionally, although the plaintiff argued that such a “step-down” clause should be void as against public policy, the court disagreed. Specifically, the court affirmed the insurer’s “legitimate underwriting concern” to limit its exposure when a large commercial truck is operated by a driver who it had not investigated, rated or approved. Moreover, the Court noted that New Jersey’s Supreme Court has upheld similar provisions.
See <i>Ford v. National Independent Truckers Insurance Co</i>., 2009 WL 3762423 (App.Div. 2009)(unreported decision) <a href=""></a>
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