In Motil v. Wausau Underwriters Insurance, A-0400-23 (Appellate Division), which involves a significant decision on automobile insurance coverage, the New Jersey Appellate Division ruled in favor of the plaintiff affording her entitled to $100,000 underinsured motorist (UIM) insurance coverage.  Specifically, the case, involving defendant Wausau Underwriters Insurance Company, addresses the complex issue of UIM coverage for a “covered driver” injured while driving a “covered auto” with an alternate garaging address under her parents’ policy.  The Court found ambiguity between the policy’s declaration and its step-down provision, leading to a ruling in favor of the policyholder’s reasonable expectation of coverage.

On December 26, 2018, Britney Motil sustained serious injuries in an automobile accident while driving her father’s 2014 Jeep Cherokee.  After settling with the tortfeasor’s insurance for $15,000, Motil sought additional UIM coverage from her parents’ policy with Wausau Underwriters Insurance Company.  The insurer denied her claim based on the policy’s step-down provision, which limited UIM coverage to $15,000 for individuals who were neither named insureds nor defined “family members.”

The insurance policy, effective November 1, 2018, named Charles and Louise Motil as the insured parties and listed four covered vehicles, including the 2014 Jeep Cherokee.  Britney Motil was identified as a covered driver.  The policy indicated a $100,000 UIM coverage limit for each person, with a consistent premium of $103 for UM/UIM coverage per vehicle.  The policy’s “Definitions” section specified that “you” and “your” referred to the named insureds, while “family member” was defined as someone related by blood, marriage, or adoption and residing in the same household. The “Limit of Liability” section included a step-down provision reducing UIM coverage to $15,000 for those not named insureds or family members.

Motil argued that the policy’s declaration created a reasonable expectation of $100,000 in UIM coverage, as it listed her as a covered driver and did not clearly differentiate between the coverage limits for named insureds, family members, and covered drivers.  On the other hand, Wausau argued that the Motil was not a covered driver because her vehicle was garaged at a separately identified alternate address and she didn’t qualify as a “family member.”  The trial court disagreed, granting summary judgment in Motil’s favor.

The Appellate Court reviewed the trial court’s summary judgment decision de novo, considering the policy language and the reasonable expectations of the insured.  The Court emphasized that insurance policies are contracts of adhesion, often involving a disparity in understanding between the insurer and the insured.  Thus, ambiguities in contracts are typically construed against the insurer and in favor of the insured.

Here, the Court found the policy’s declaration and step-down provision to be ambiguous.  The declaration plainly indicated $100,000 in UM/UIM coverage for each person and did not clearly warn the insureds of the step-down limitation for covered drivers.  The consistent premium charged for each vehicle further supported the expectation of equal coverage.  The Court concluded that the policyholder’s reasonable expectation of $100,000 in UIM coverage for Britney Motil should be honored.  The ambiguity between the declaration and the policy’s provisions justified applying the “reasonable expectations doctrine” to grant the coverage sought by the plaintiff.

A copy of the Motil decision can be found here.

For additional questions, please contact Robert J. Cahall, Esq., Glen Shikunov, Esq., and/or Igor Konstankevich, Esq.

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