Background
Nicky Travieso was injured in a June 2022 accident allegedly caused by an uninsured motorist while he was driving a vehicle owned by his employer, Foulke Management Corporation. Zurich American Insurance Company insured the vehicle under a policy providing $1 million in automobile liability coverage and $1 million in general liability coverage. Foulke, however, selected uninsured-motorist coverage of $15,000 per person, the statutory minimum then in effect.
Zurich offered Travieso the $15,000 UM policy limit, but he contended that N.J.S.A. 17:28-1.1(f) required $1 million in UM coverage because that was the policy’s third-party liability limit. The trial court agreed and reformed the policy to provide $1 million in UM coverage. After the Appellate Division denied leave to appeal, the New Jersey Supreme Court granted Zurich leave limited to the interpretation of N.J.S.A. 17:28-1.1(f).
The Court’s Holding
The unanimous Court held that N.J.S.A. 17:28-1.1(f) entitled Travieso to no more than the $15,000 UM limit selected by his employer. The statute prohibits a commercial automobile policy from providing an employee less UM or UIM coverage than it provides the named insured; it does not require first-party UM coverage to equal the policy’s third-party liability limit.
The Court found that the trial court had misunderstood the policy. Foulke did not have $1 million in UM coverage: both Foulke and its employees received the same $15,000 UM limit. Applying its same-day interpretation of the statute in Chiaccheri v. Zurich American Insurance Co., the Court concluded that the policy satisfied statutory requirements and public policy. It reversed and remanded for entry of partial summary judgment dismissing the claims for policy reformation and damages under N.J.S.A. 17:28-1.1(f), leaving other statutory claims for the trial court to address.
Key Takeaways
- For purposes of N.J.S.A. 17:28-1.1(f), the maximum UM coverage “available under the policy” is the UM limit selected for the named insured, not the policy’s general third-party liability limit.
- The statute bars step-down provisions that give employees less UM or UIM coverage than the named insured receives.
- A commercial policy may carry UM limits below its liability limits when the UM coverage satisfies statutory minimums and applies equally to the named insured and its employees.
Why It Matters
The decision rejects an interpretation that would automatically increase commercial UM coverage to match substantially higher liability limits. New Jersey employers may select UM coverage at the statutory minimum without exposing their insurers to the policy’s full liability limit, provided employees receive the same UM coverage as the named insured.
The ruling also confirms that the Court’s construction of N.J.S.A. 17:28-1.1(f) applies identically to uninsured- and underinsured-motorist coverage.