A New Jersey appellate court affirmed a judgment in favor of an insured based on ambiguity. The case is Motil v. Wausau Underwriters Ins. Co., 2024 N.J. Super. LEXIS 31 (N.J. Super. Ct. App. Div. 2024).
Britney Motil was severely injured while driving her father's Jeep. She settled a suit with the other driver for $15,000, which was the other driver's policy limit. She then sought another $100,000 in UIM benefits from her father's insurer, Wausau Underwriters, who had issued a policy that covered four separate vehicles, including the Jeep. Her father paid a separate UM/UIM premium for each of the four covered autos, one of which was the Jeep, under his policy. Motil was listed as a "covered insured" under that policy, and the Jeep was a covered auto, though it was garaged at an "alternate garaging address." However, the policy also included a "step-down provision" that limited UM/UIM coverage to $15,000 per person and $30,000 per accident for bodily injury for drivers who were neither a named insured nor a "family member" within the meaning of the policy.
Wausau denied coverage for Motil's claim on the basis that she was not a named insured nor a "family member" under the policy, the limits of UIM benefits available to her under the policy were the same as those already paid by the other driver. Motil sued for UIM benefits, and both parties moved for summary judgment. The lower court agreed with Wausau that the step-down provision was clear, but granted Motil's motion for summary judgment based on the "reasonable expectations doctrine." The court said Wausau could not "profit off of plaintiff and her family by selling them insurance and telling them it covers all of them but then . . . tell plaintiff she should buy her own insurance if she really wants the coverage." Wausau appealed, claiming the lower court had been wrong to ignore the step-down provision in the policy.
UM/UIM for a Covered Driver
The Appellate Division of the Superior Court of New Jersey noted that an auto insurance policy covers both the named insured and "anyone who is entitled to coverage…by virtue of a person's status as an operator or occupier of a covered auto." The step-down provision was clear, but it was not determinative of whether Motil was or was not entitled to UIM benefits. For one thing, the declarations page of the policy explicitly listed Britney Motil as a covered driver. For another, Mr. Motil had paid an identical UM/UIM premium for each of the four insured vehicles, including the Jeep his daughter was driving at the time of the accident, therefore UIM benefits would be the same for any covered driver as it would be for the named insured or a family member.
Covered Auto at an Alternate Garaging Address
The judges also pointed out that the Jeep in question was garaged at an alternate address specified in the policy declarations. However, the policy did not define either "covered driver" or "alternate garaging address," and there was no clear indication of whether or how the policy's step-down provision applied to covered drivers using a covered auto garaged at an alternate address. According to the court, the policy could have specified the application of the step-down provision to covered drivers and covered autos at an alternate garaging address but did not do so. The judges ruled the declarations page and the policy, when read together, were ambiguous regarding whether and how the UM/UIM step-down provision applied to covered drivers and covered autos garaged at an alternate address.
Conclusion
Based on their review of the case, the Appellate Division of the Superior Court of New Jersey affirmed the ruling of the trial court.
Editor's Note: Ambiguity is interpreted against insurers because they are the ones writing the policies. The policy at issue in this case was ambiguous because there was no clear indication of whether the step-down provision applied to a covered driver who drove a covered auto garaged at an alternative garaging address. Wausau argued the step-down provision clearly applied to Britney Motil because she was neither a named insured nor a "family member" within the meaning of the policy. The court agreed that the step-down provision had a clear application but noted that even a clear provision is not a deciding factor when a policy is otherwise found ambiguous. The difference between covered insured, named insured, and family member are all very important elements to remember when looking at any policy.
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