In Universal Underwriters Group v. Heibel, 2006 WL 1675354 (N.J. Super A.D. June 20, 2006), the Superior Court of New Jersey found that “New Jersey's compulsory motor vehicle liability insurance statute…imposes no requirement on an automobile dealer to provide collision insurance to a permissive user of the insured dealer's motor vehicle.”

 

George Heibel was test driving a motorcycle owned by Harley Davidson of Edison when he lost traction on the road and was involved in an accident. The motorcycle suffered about $3,800 in property damage. Harley's insurance carrier, Universal Underwriters Group, paid for the damage and sued Heibel for reimbursement.

 

Heibel claimed that he was a permissive user under Harley's policy and that Universal could not subrogate against him. Universal argued that Heibel was not an insured. The court agreed with Universal, stating that Heibel did not fit the definitions listed in the policy for who is an insured.

 

Heibel also asserted that public policy required him to be insured under Harley's policy. New Jersey law requires motor vehicle owners (including motorcycle owners) in the state to carry liability insurance. The court, however, pointed out that the law does not require the motor vehicle owner to provide coverage for a permissive user test driving a vehicle who is involved in an accident where no third party is involved.

 

The court said, “In this case, there simply is no public benefit implicated because no innocent third party was injured in the accident. Accordingly, we are convinced that there is no statutory requirement compelling a dealer's insurer to indemnify a permissive user for damages to the dealer's own motor vehicle.”