The New Jersey Superior Court, Appellate Division, reversed a decision of the Superior Court, Law Division in Supplemental Liability Insurance Policy

On May 29, 2012, The New Jersey Superior Court, Appellate Division, reversed a decision of the Superior Court, Law Division, which had held that a Supplemental Liability Insurance policy purchased at the time a car was rented by a driver did not cover injuries suffered by his wife and children, passengers in the vehicle, in an accident that was his fault.

In Khandelwal v. Zurich Insurance Co., Docket No. A-2620-10T2, the Appellate Division ruled that Supplemental Liability Insurance coverage purchased by Lalitkumar Khandelwal when he rented a car from Budget Rent-A-Car of North Brunswick, N.J., must be held to pay for injuries suffered by his wife and two daughters when Mr. Khandelwal crossed the centerline of a roadway in Geneseo, N.Y. and struck an oncoming car head-on.

Zurich had taken the position that a provision in the policy excused it from having to pay for injuries suffered by family members of the driver-renter.

Mrs. Khandelwal took the position that the coverage applied to her and her daughters because limitations on automobile insurance contained in insurance policies are against New Jersey public policy; that the limitations on coverage were not adequately set forth to the purchaser; and, that the rental agency’s policy was to deliberately hide the limitation from a renter.

The Appellate Division ruled that the exclusion was void because New Jersey public policy unambiguously bars limitations in auto insurance that attempts to limit claims by family members against other family members who negligently injure them.

The case was remanded to the trial court for further proceedings.

Mrs Khandelwal and her daughters were represented be Edward Slaughter, Jr., of the law firm oft Pellettieri Rabstein and Altman, Esqs. 100 Nassau Park Blvd., Princeton, N.J. 08540, Ph. (609) 520-0900.

Zurich Insurance was represented by Gregory S. Pennington, Esq., of the law firm of White, Fleischner, and Fino LLP, 272 Broad St., Red Bank. N.J. 07701. Ph. (732) 530-7787.

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