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Appellate Division Overturns Underinsured Motorist Judgment

July 13, 2018

WILLIAM H. MONE reports on a recent published decision from the Superior Court of New Jersey, Appellate Division.

 A New Jersey woman was injured as a passenger in her boyfriend’s father’s vehicle, when the vehicle was struck by another driver. Without notifying the boyfriend’s father’s insurance carrier, the woman filed suit against the driver of the other vehicle and settled her claim for $15,000. Without notifying her boyfriend’s father’s insurance carrier of the settlement, the woman sent the carrier two notices indicating that she would accept such an offer and pursue Underinsurance Motorists (UIM) benefits under the boyfriend’s father’s policy in order to recover the difference between her alleged damages and the $15,000 paid by the other driver. The carrier did not respond to her notice in the requested timeframe.

 

The woman brought suit against the boyfriend’s father’s insurance carrier and made a claim for the UIM benefits under his policy. In doing so, the woman claimed that her boyfriend’s father was actually her father-in-law and that she lived with him, as his policy had a provision that reduced the available UIM benefits for those who were not resident-relatives of the policy holder. In support of her claim, the woman submitted hospital records to the carrier that indicated she was married to her boyfriend, but that she did not live with her boyfriend’s father.

 

The insurance carrier, still unaware that the woman had already settled her lawsuit against the other driver, informed her that it would allow such a settlement with the other driver and that she would be eligible for UIM benefits under her boyfriend’s father’s policy. However, it was later revealed during discovery that the woman did reside with her boyfriend’s father, but that her and her boyfriend were not actually married. The insurance carrier then notified the woman that the UIM step-down provision in the policy would apply, essentially negating the benefits available to her under the policy. Both parties moved for summary judgment.

 

The trial court ruled in favor of the woman, because the insurance carrier chose to initially award the woman UIM benefits after learning that she did not reside with the policy holder (boyfriend’s father). Thus, in the court’s view, the carrier was estopped from denying UIM coverage once they learned that the woman was not related to her boyfriend’s father, as his daughter-in-law. The insurance carrier appealed.

 

On appeal, the Appellate Division overturned the trial court ruling, largely due to the woman’s deceit towards the carrier, citing the insurance policy’s fraud and misrepresentation provisions as well as case law that allows for an insurance policy to be voided for willful misrepresentations of fact to the carrier.

 

Please contact William H. Mone if you have any questions or need assistance in connection with this subject.