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Renting a Car – Supplemental Liability Insurance Does Not Mean You’re Injuries are Covered in Case of Car Accident

By: Attorney Edward Slaughter, Jr

Often people are not aware of exactly what they have bought when they purchase insurance. People often think that they have protected themselves against injury and unfortunate occurrences only to find that they haven’t.

In a case entitled Khandelwal v. Zurich Insurance, the Superior Court of New Jersey, Appellate Division made a ruling that illustrates what I am talking about. I know the details of this case because I was the Injury lawyer involved.

New Jersey lets a person who did not purchase the particular insurance policy but who is a potential beneficiary of the policy sue to enforce the policy. Many states do not let them do that and, if the person who bought the policy does not sue to enforce a policy, a person who has been injured by the policyholder cannot seek to enforce the policy terms.

I was the lawyer representing the wife and two daughters of Lalitkumar Khandelwal. The facts of the case are as follows.

Mr. Khandelwal rented a car from Budget Rent-A-Car. He intended to take his wife and daughters on a trip to Niagara Falls. He held a personal policy on a car that he owned that could pay out a total of $50,000 if more than one person was injured by his negligent operation of a car.

When he rented the car from Budget he was offered Supplemental Liability Insurance by the woman behind the counter at the rental agency. That insurance was issued under a policy issued by Zurich via its subsidiary, Empire Fire and Marine Insurance Co. It contained a one million dollar limit. Mr. Khandelwal opted to take that coverage. He said he did it to protect his family in case they are injured in a car accident.

While en route to Niagara Falls Mr. Khandelwal was involved in a car accident that was his fault. Persons in the other vehicle involved were injured. In addition both of his daughters and his wife suffered major injuries. Mr. Khandelwal was faced with five claims against him.

Zurich-Empire advised Mr. Khandelwal’s injured family members that because their policy contained an exclusion stating that it would not pay for injuries to family members of the renter, it would not pay them for their injuries.

Because New Jersey law allows a person to enforce policies from which they are potential beneficiaries, this firm began an action to make the policy applicable to Ms. Khandelwal and her daughters. After several people had been deposed and after various documents had been obtained, a Motion was made by me, the injury lawyer, to make the policy applicable to Mr. Khandelwal’s family.  The Judge who heard the Motion denied it and I appealed the case to the Appellate Division

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