Background
Craig Chiaccheri was injured in a 2022 motor vehicle accident while driving a vehicle owned by his employer, TJX Companies, Inc. Zurich American Insurance Company insured the vehicle under a commercial policy providing $2 million in general bodily-injury liability coverage and, through an endorsement accepted by TJX’s representatives, UIM coverage of $15,000 per person and $30,000 per accident. The at-fault driver had $100,000 in liability coverage, which Chiaccheri accepted in settlement.
Zurich denied Chiaccheri’s UIM claim because the at-fault driver’s $100,000 policy limit exceeded the Zurich policy’s $15,000 per-person UIM limit. Chiaccheri sued and sought reformation of the policy to provide $2 million in UIM coverage, arguing that the lower limit violated N.J.S.A. 17:28-1.1(f) and public policy. After the federal district court granted Zurich summary judgment, Chiaccheri appealed, and the Third Circuit certified two questions of New Jersey law to the state supreme court.
The Court’s Holding
The unanimous court answered that the maximum UIM coverage “available under the policy” for an employee under N.J.S.A. 17:28-1.1(f) is the UIM limit the business selected for the named insured—not the policy’s general third-party liability limit. The statute requires parity between the UIM coverage afforded to the named insured and the employee; it does not require UIM coverage to equal the policy’s bodily-injury liability coverage.
The court further answered that an endorsement setting UIM coverage below the policy’s general liability limit violates neither N.J.S.A. 17:28-1.1(f) nor public policy if two conditions are satisfied: the employee’s UIM coverage meets all applicable requirements of N.J.S.A. 17:28-1.1(a) and (b), and the named insured and employees are subject to the same UIM limits as required by subsection (f). The court answered only the certified legal questions and did not dispose of the pending federal appeal or finally determine the validity of Zurich’s particular endorsement.
Key Takeaways
- N.J.S.A. 17:28-1.1(f) requires equal UIM limits for a business named insured and its employees, not equality between UIM and third-party liability limits.
- A commercial policy may set UIM coverage below its bodily-injury liability limit if the coverage satisfies the applicable statutory requirements.
- The 2007 amendment adding subsection (f) eliminated employee “step-down” provisions tied to other insurance; it did not require businesses to purchase the highest UIM coverage insurers may offer.
Why It Matters
The decision clarifies that New Jersey businesses retain a statutory choice among permissible UIM limits and that an employee ordinarily receives the UIM limit actually selected under the commercial policy. Insurers and policyholders must still ensure that the selected coverage complies with statutory requirements and applies equally to the named insured and covered employees.
Because the court acted on certified questions, the Third Circuit remains responsible for applying those answers in Chiaccheri’s federal appeal.