Ambiguity in Auto Insurance Policy Coverage and Personal Injury

Falk v. Donovan

Docket No.: A-4236-18T4

Decided May 22, 2020

Submitted by New Jersey Personal Injury Lawyer, Jeffrey Hark.

In a recent unpublished decision, the Appellate Division reviewed a trial judge’s decision to allow plaintiff coverage under the owner of the vehicle’s underinsured motorists coverage (UIM) of $500,000 when plaintiff’s own UIM policy was only $100,000.

In Falk, plaintiff was operating an automobile owned by Dennis Hall, who was then plaintiff’s fiancé. At the time, Kevin Donovan was operating an automobile, apparently with the consent of Michael Donovan, the owner of the car. Donovan’s vehicle struck the rear of the car plaintiff was driving and plaintiff sustained personal injuries.

Donovan’s vehicle had insurance coverage with bodily injury limits of $100,000. Plaintiff was insured under an automobile insurance policy which provided uninsured motorists (UM) and underinsured motorists coverage (UIM) coverage with policy limits of $100,000. Hall’s automobile was insured with coverage of up to $500,000.

Plaintiff filed an amended complaint to seek compensation from Hall’s $500,000 policy.  The insurance company made a motion for summary judgment claiming plaintiff was not a “covered person” under the UIM provision of the policy, and even if she was, the step-down provision in the policy expressly limited her coverage to UM of her own $100,000 policy. The Judge found the language in the insurance policy ambiguous, and concluded plaintiff to be entitled to UIM coverage up to $500,000.

The parties settled for $400,000, and the insurance company appealed.

Ambiguities in insurance policies are read in favor of the insured – here, the plaintiff – at the expense of the insurer.  The Appellate Division found that the “covered person” provision in the insurance policy was indeed ambiguous, and therefore plaintiff was appropriately deemed a “covered person.” However, the Appellate Division also found that the trial judge incorrectly interpreted the step-down provision as ambiguous.  Instead, the step-down provision was found to be clear and unambiguous, despite the term UM being read to include both UM and UIM coverage.  The Appellate Division reversed on these grounds, meaning plaintiff was only allowed $100,000 in coverage.

If you have been injured as a result of negligence on a part of someone else, insurance is usually in place to compensate for injury.  UM and UIM may also available in automobile accidents.  Be sure you hire a personal injury attorney that understands and fights for the full insurance amounts that you are entitled.

For personal injury matters, you pay nothing upfront, and our fee is paid as a percentage of your recovery. At Hark & Hark, we represent clients for any case in any town in New Jersey including Audubon, Gloucester City, Oaklyn, Audubon Park, Gloucester Township, Pennsauken, Barrington, Haddon Heights, Pine Hill, Bellmawr, Haddon Township, Pine Valley, Berlin Borough, Haddonfield, Runnemede, Berlin Township, Hi-Nella, Somerdale, Brooklawn, Laurel Springs, Stratford, Camden, Lawnside, Voorhees, Cherry Hill, Lindenwold, Waterford, Chesilhurst, Magnolia, Winslow, Clementon, Merchantville, Woodlynne, Collingswood, Mt. Ephraim, and Gibbsboro.

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Jeffrey Hark is a New Jersey Civil and Criminal Lawyer.

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