Insured persons' reasonable expectations can not overcome a clear and unambiguous insurance
During my more than 53 years working in the insurance industry, I have asked all insured persons I have encountered if they have read and understood their insurances. Of the thousands I asked, only two answered that they read and understood the policy and after careful investigation, I found that they both lied.
I Giselle Polizzi v Liberty Mutual Fire Insurance Company Civil Action No. : 14-02768, United States District Court District of New Jersey (January 26, 2021), the plaintiff argued that her reasonable expectations of coverage surpassed the language of an approval, reducing the available underinsured auto insurance coverage (UIM) from $ 250,000 to $ 15,000. The insurer denied her claim, she sued, and after the discovery, both the plaintiff and the defendant moved to a summary judgment following a car accident and the resulting dispute over a correct interpretation of an insurance policy.
Liberty Mutual Mid-Atlantic Issued Passenger Car Policy No. AOU-238-288162-40 0 7 ("Mid-Atlantic Policy") to Wilma Negron and Jose Negron-Rivera ("Negrons"), both called " insured ”. The plaintiff was listed as a driver on the declaration page of Mid-Atlantic Policy, but was not a "named insured." A 2006 BMW X3 owned by Negrons was a listed vehicle covered by the Mid-Atlantic Policy.
The declaration page of the Mid-Atlantic Policy set limits for the recovery of personal injury for insured persons at $ 250,000 per person for accidents involving uninsured (or underinsured) motorists "(" UIM "). However, the Mid-Atlantic policy also includes an approval with entitled "UNSURED MOTORIST COVERAGE – NEW JERSEY" ("Approval") This approval contains a provision ("Step-down Clause") which lowered the standard UIM limit of $ 250,000 to $ 15,000 if the insured is neither a "named insured" or "family member" as defined in the Mid-Atlantic Policy.  Mid-Atlantic policy defines "family member" as "a person who is related to you by blood, marriage or adoption who is a resident in your household . "(emphasis added). Thus, if an insured person is involved in an accident with an uninsured (or underinsured) claimant, and they are neither a defined" family member "nor a" named insured " , the UIM limit drops from $ 250,000 per person to $ 15,000 per person by using the Provisioning Clause.
The plaintiff claims that she was hit and injured by an underinsured vehicle on November 15, 2010 while driving her parents' BMW X3 in 2006. The plaintiff claimed that she was told that the injured party in the accident had a personal injury insurance limit of only $ 100,000 with State Farm Insurance. It is undisputed that the pest owner was an underinsured motorist. At the time of the accident, the plaintiff did not live in her parents' home, but rather she lived elsewhere in New Jersey.
Both movements are based on the same legal question: do the terms of the approval of Central Atlantic policy apply? If the answer is yes, the defendant's proposal will succeed. if not, the plaintiff's will succeed. In this movement, the plaintiff is not a "family member" as defined in the approval. Thus, the only way she will be entitled to the UIM limit of $ 250,000 is if the approval does not apply to Central Atlantic policy.
The plaintiff judged that the defendant's attempt to change the body of the Central Atlantic policy with the approval (and Step-down Clause) must fail because it created ambiguity in the policy and lacked sufficient notice needed to defeat the plaintiff's reasonable expectations that she was entitled to UIM coverage according to the declaration page in Mid-Atlantic Policy.
Applicability of the endorsement containing the descending clause
If the language of insurance is clear, the insurance should be interpreted as written as it is not the function of the courts to rewrite the insurance to make a better insurance policy than the one purchased. If a section of a policy potentially creates ambiguity, courts should not only focus on the language of one section but rather try to read the offensive section in the context of the whole policy to determine whether harmony can be found between the alleged ambiguous language and the rest of the policy. If harmony cannot be found, there is ambiguity.
The plaintiff claimed that since she was listed on the declaration page as a driver, she reasonably expected to have the same protection and coverage as the "named insured" ( in e ., Her parents), and the endorsement. – which contains the suspension clause which she thought was in breach of the declaration side – can not counteract these reasonable expectations, especially when the declaration side does not contain any signs that the approval changes its UIM regulations.
An insurance contract is not per se ambiguous because its declaration sheet, definition section and exclusion provisions [ in . e ., Step-down Clause] are presented separately. The Court recognized the usefulness of cross-references in insurance, and that without this tool, insurance would increase in length and risk making insurance more difficult for the average insured to understand. When faced with a declaration page and an approval containing potentially conflicting provisions, the courts should resist a quick ambiguity and instead dare to read the two sections in harmony, if possible.
The District Court found that the conditions of Mid-Atlantic policy are clear and unambiguous and thus do not apply the doctrine of reasonable expectations.
The cover of the Mid-Atlantic Policy warns the policyholder in bold to "[p] lease read your policy and each approval carefully ." The policy specifically refers to the approval with its title on the declaration page. "THIS SUPPORT CHANGES THE POLICY. PLEASE READ IT." Taken as a whole, harmony can be found between the body of Mid-Atlantic policy and the approval.
An average policyholder would have been aware of the approval and is therefore responsible for the content within. As the terms of the Mid-Atlantic policy are unambiguous, the plaintiff could not reasonably have expected to be entitled to the UIM limits on the declaration side as those limits were changed by the approval.
The plaintiff admits that she did not live at the insured's household until after the accident. Therefore, the plaintiff was not a "family member" as defined in the Mid-Atlantic Policy at any time prior to her accident (and especially not at the time the policy was originally issued).
Defendants presented sufficient evidence to show that the terms of the approval should apply to Central Atlantic policy. As the approval and descent section apply to the Mid-Atlantic Policy, the plaintiff is only entitled to a UIM limit of $ 15,000, as she is neither a defined "named insured" nor a "family member". The $ 15,000 is further reduced by the plaintiff's available policy limit of $ 100,000, thus leaving no UIM coverage available to the plaintiff under the Mid-Atlantic policy. The defendants' request for a summary judgment was granted.
The court followed the RFIP rule and read the entire policy and defeated the attempt to change the meaning of the policy using the doctrine Reasonable Expectations. Since the insurance was purchased by the plaintiff's parents and it can reasonably be concluded that she did not read it until her lawyers found out that the tortfeasor had insufficient insurance to pay for his damages, her reasonable expectations did not exist until after the accident and, in my view. , her expectations were unreasonable and an attempt to get coverage that her parents did not pay for.
© 2021 – Barry Zalma
Barry Zalma, Esq., CFE, now limits his practice to serving as a specialized insurance consultant. in insurance coverage, insurance claims handling, infidelity and insurance fraud almost equally for insurers and policyholders. He also acts as an arbitrator or mediator for insurance-related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims lawyer and more than 52 years in the insurance industry. He is available at http://www.zalma.com and email@example.com.
Mr. Zalma is the first recipient of the first annual Claims Magazine / ACE Legend Award.
For the past 53 years, Barry Zalma has devoted his life to insurance, insurance claims and the need to fight insurance fraud. He has created the following library of books and other materials to enable insurers and their claims staff to become insurance claims staff.
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