Law Offices of Jan Meyer and Associates, P.C.
Guide to Recovery of PIP in New Jersey
With Other Selected New Jersey Laws Related to Subrogation
By: Noah Gradofsky, Esq.
Edited by: Jan Meyer, Esq.
(201) 862-9500
(201) 862-9400 (Fax)

Click here to download our printable Quick Guide to New Jersey PIP Recovery (Last udpated January 7, 2015).

Click here for our Guide to Recovery of PIP in New York.

This is a basic primer on New Jersey law as pertaining to recovery of no-fault (AKA "PIP") payments.  It by no means covers all the intricacies of New Jersey law, and therefore should be used as reference only. Some issues of law may be mentioned more than once on this page, where we felt the issue belongs under more than one heading.  This document is provided as a reference guide only and is provided subject to this disclaimer. This page is current as of April 15, 2016. If you have been here before and want to look for newly added information please see the update log below.

Click on individual terms to see how they are defined in New Jersey PIP Law or to access further discussion of a particular issue (note that many of the definitions and discussions will come up in the frame at the bottom of the page). The best way to view this guide is to browse the table of contents in the top frame. Click on the subject of interest, and you will see the discussion in the bottom frame. CLICK HERE IF YOU DO NOT SEE THE BOTTOM FRAME Note that some terms are left undefined, either because the definitions are intuitive, or because they are beyond the scope of this guide.

OVERVIEW (see "Contents" below for links to each topic and their subtopics):


In the future, additional information added to this web page will be listed here so that if you check this page periodically, you can easily find updated information.


N.J.S.A. 39:6A-9.1:Recovery of PIP from certain torfeasors, statute of limitations, arbitration requirement.

a. An insurer, health maintenance organization or governmental agency paying benefits pursuant to subsection a., b. or d. of section 13 of P.L.1983, c. 362 (C.39:6A-4.3), personal injury protection benefits in accordance with section 4 or section 10 of P.L.1972, c. 70 (C.39:6A-4 or 39:6A-10) , medical expense benefits pursuant to section 4 of P.L.1998, c. 21 (C.39:6A-3.1) or benefits pursuant to section 45 of P.L.2003, c.89 (C.39:6A-3.3), as a result of an accident occurring within this State, shall, within two years of the filing of the claim, have the right to recover the amount of payments from any tortfeasor who was not, at the time of the accident, required to maintain personal injury protection or medical expense benefits coverage, other than for pedestrians, under the laws of this State, including personal injury protection coverage required to be provided in accordance with section 18 of P.L.1985, c. 520 (C.17:28-1.4), or although required did not maintain personal injury protection or medical expense benefits coverage at the time of the accident.

b. In the case of an accident occurring in this State involving an insured tortfeasor, the determination as to whether an insurer, health maintenance organization or governmental agency is legally entitled to recover the amount of payments and the amount of recovery, including the costs of processing benefit claims and enforcing rights granted under this section, shall be made against the insurer of the tortfeasor, and shall be by agreement of the involved parties or, upon failing to agree, by arbitration. Any recovery by an insurer, health maintenance organization or governmental agency pursuant to this subsection shall be subject to any claim against the insured tortfeasor's insurer by the injured party and shall be paid only after satisfaction of that claim, up to the limits of the insured tortfeasor's motor vehicle or other liability insurance policy.

Summary of N.J.S.A. 39:6A-9.1:

Notes on N.J.S.A 39:6A-9.1:

  • APIP (Additional-PIP) has the same recovery rights and procedures as PIP. What about Medpay? N.J.S.A. 39:6A-9.1 speaks of the right of recovery for an insurer "paying . . . personal injury protection benefits in accordance with section 4 or section 10 of P.L. 1972, c. 70 (C. 39:6A-4 or 39:6A-10)." While 39:6A-4 covers regular PIP, 39:6A-10 covers APIP. This means that claims paid under a New Jersey APIP policy will be recoverable in the same situations that PIP is recoverable, and the same rules of recovery will apply (for example, the requirement to arbitrate if the tortfeasor is insured).

  • PIP is recoverable from non motor-vehicle tortfeasors (e.g. a bar serving alcohol). N.J.S.A. 39:6A-9.1 allows recovery from any tortfeasor not required to/not carrying PIP. This means not only vehicles not requiring PIP, but any tortfeasor which is not a vehicle. For example, a bar (i.e. dram shop) serving alcohol is subject to recovery for its negligent service of alcohol. State Farm Mut. Auto. Ins. Co. v. Licensed Beverage Ins. Exchange, 146 N.J. 1 (1996)("We hold that the reimbursement right conferred by section 9.1 encompasses all tortfeasors that are not subject to the No-Fault law."). The holding in State Farm is seemingly confirmed by the later addition of language to N.J.S.A. 39:6A-9.1(b) referring to recovery of PIP from the "insured tortfeasor's motor vehicle or other liability insurance policy" which indicates that the right of recovery encompasses non-motor-vehicles. Presumably, this reasoning would also apply liability for PIP reimbursement to social host for service of alcohol as well, with the possible exception of the PIP carrier seeking reimbursement of PIP benefits paid for intoxicated adult driver, since N.J.S.A. 2A:15-5.7 explicitly states that a person of drinking age cannot sue a social host for injuries resulting from providing alcohol to that person (however, since as noted above, recovery of PIP is a direct right, not a subrogated right, the restriction on recovery by an intoxicated adult probably should not apply to the PIP carrier's reimbursement right). Please visit our New Jersey Dram Shop and Social Host Liability Law web page for further discussion of New Jersey's liquor liability laws (link opens in new tab).

    Note that recovery from tortfeasors other than motor vhicles, if they are insured, should be through arbitration against the insurer as is the case where the tortfeasor is a motor vehicle.

  • PIP is not recoverable from a "public entity" or a "public employee." N.J.S.A. 59:9-2(e) prohibits tort subrogation against "a public entity or public employee." (see further discussion below). Although, technically, PIP recovery is a direct right of recovery and not subrogation, and technically the recovery is against the insurer rather than the tortfeasor, Hanover Ins. Co. v. Borough of Atl. Highlands, 310 N.J.Super. 568 (App.Div. 1998), certif. denied, 156 N.J. 383 (1998) held that N.J.S.A. 59:9-2(e) applies to prohibit recovery of PIP from the public entity/employee.
  • PIP is not recoverable from a federal vehicle. Cont'l Ins. Co. v. United States, 335 F. Supp. 2d 532 (D.N.J. 2004).
  • Attorneys fees are (probably) not recoverable as "costs of . . . enforcing rights granted under this section." Although N.J.S.A. 39:6A-9.1 allows for recovery of "the costs of processing benefit claims and enforcing rights granted under this section," David v. Gov't Employees Ins. Co., 360 N.J.Super. 127, 144-149 (App.Div. 2003) held that this right of recovery did not include a right to recover attorney fees, but, rather, administrative costs. However, part of the rationale of David was that the court worried that subjecting the tortfeasor's carrier's policy to liability for attorney fees would reduce the insurance limits available to the injured party for the bodily injury claim. Since N.J.S.A. 39:6A-9.1(b) now explicitly provides that the PIP reimbursement claim may only be paid after the bodily injury claim is paid, this rationale for David no longer applies, and perhaps this point should be revisited in future litigation. Note that in David the court said that the right of recovery "may allow recovery of costs of the arbitration process itself."
  • New Jersey law does not prohibit subrogation of PIP benefits paid for an out-of-state accident. N.J.S.A. 39:6A-9.1 refers to "an accident occurring within this State." Although no New Jersey court has addressed this issue under the current N.J.S.A. 39:6A-9.1, USAA Cas. Ins. Co. v. Smith, 2013 WL 4881838 (N.D.W.V. Sept. 12, 2013) (click here for outside link to read this case) and Giancola v. Thrifty Rent-A-Car Sys., Inc., 569 So. 2d 849, 850 (Fla. Dist. Ct. App. 1990) (click here for an outside link to read this case) have concluded based on Cirelli v. Ohio Casualty Ins. Co., 72 N.J. 380 (1977) (decided under the former N.J.S.A. 39:6A-9) that New Jersey law does not prohibit a New Jersey PIP carrier from subrogating its PIP payments for accidents occurring outside of New Jersey. Further support for this conclusion can be found in Perreira v. Rediger, 169 N.J. 399, 416 (N.J. 2001), where the court discussed a regulation permitting subrogation clauses and wrote that "the regulations ... must be interpreted narrowly as limited to cases in which the collateral source rule does not apply, for example, a case in which choice of law principles require application of the law of a jurisdiction with a collateral source rule at variance from our own." Note that depending on a number of factor as to choice of law, the accident state's laws might prevent subrogation.
  • What if PIP is paid to a pedestrian? If a pedestrian is struck by an automobile, the pedestrian receives PIP benefits from his/her own PIP coverage, since N.J.S.A. 39:6A-4 specifies that an "automobile"'s PIP policy applies where an insured sustains an injury "as a pedestrians, caused by an automobile or by an object propelled by or from an automobile[.]" Note that the coverage that applies is the pedestrian's insurer's policy. The automobile that strikes a pedestrian has no PIP obligation. If the pedestrian does not have his/her own PIP coverage, the pedestrian can collect PIP from the New Jersey Property-Liability Insurance Guaranty Association (NJPLIGA) per N.J.S.A. 17:30A-1 et. seq. If the driver of the automobile striking the pedestrian is properly insured, the driver of the automobile will not be liable for the PIP, because the driver will have been required to carry PIP and will have had PIP and thus N.J.S.A.39:6A-9.1 will not afford a right of recovery. If the driver of the automobile was not properly insured, then that driver would be liable for PIP recovery per N.J.S.A. 39:6A-9.1. If the pedestrian was struck by a non-automobile, then the person's automobile carrier should not pay PIP in the first place. See discussion below regarding this situation and potential rights of recovery.
  • Certain legal questions may go to the courts rather than arbitration. N.J.S.A. 39:6A-9.1 requires that where the tortfeasor who is subject to PIP reimbursement claims is insured, "the determination as to whether an insurer ... is legally entitled to recover ... shall be by agreement of the involved parties or, upon failing to agree, by arbitration." Similarly, in N.J.S.A. 39:6A-11 the statute says that where multiple PIP policies apply to the same injrued party, the carriers, "shall be entitled to recover ... only by inter-company arbitration or inter-company agreement, an equitable pro-rata share of the benefits paid." In State Farm Indem. Co. v. National Liab. & Fire Ins. Co., 439 N.J. Super. 532 (2015) an insurer being sought after for pro-rata contribution claimed that the injured party was not a resident of their household. They argued that this was a "coverage question" that needed to be decided by the court before the arbitration requirement of N.J.S.A. 39:6A-11 kicked in. The Appellate Division disagreed and indicated that almost any question regarding pro-rata recovery should be decided through arbitration. The court's opinnion in State Farm seems quite different from its indications in Coach USA, Inc. v. Allstate New Jersey Ins. Co., 354 N.J.Super. 277 (App.Div.), certif. den,, 175 N.J. 170 (2002). In that case, the court decided that a bus carrying bus-PIP was not liable for at-fault PIP reimbursement claims under N.J.S.A. 39:6A-9.1. The court rejected the suggestion that this issue was subject to the arbitration requirement in N.J.S.A. 39:6A-9.1 saying, "we reject Allstate's argument that this dispute, which involves a recurrent issue of statutory interpretation, should have been subject to the vagaries of separate and endlessly-initiated arbitration proceedings under authority granted by the arbitration provisions of N.J.S.A. 39:6A-9.1. The issue presented, a purely legal one, is 'much more within the expertise of the court' than of arbitrators." Coach 354 N.J. Super. at 282. The court in State Farm did not discuss Coach and how it could be distinguished. Potential distinguishing factors include how "purely legal" the question presented was (and hence how likely the issue was to result in multiple identical arbitration cases which could be avoided if the court established a rule) as well as the fact that Coach dealt with N.J.S.A. 39:6A-9.1 while State Farm addressed N.J.S.A. 39:6A-11 (though the arbitration requirement in both statutes seem reasonably similar).

  • N.J.S.A. 39:6A-11: Pro-rata sharing when more than one PIP policy applies (rare)

    If two or more insurers are liable to pay benefits under sections 4 and 10 of P.L.1972, c. 70 (C.39:6A-4 and 39:6A-10) under a standard automobile insurance policy for the same bodily injury, or death, of any one person, the maximum amount payable shall be as specified in those sections 4 and 10 of P.L.1972, c. 70 (C.39:6A-4 and 39:6A-10) , section 4 of P.L.1998, c. 21 (C.39:6A-3.1) and section 45 of P.L.2003, c.89 (C.39:6A-3.3), respectively, if additional first party coverage applies and any insurer paying the benefits shall be entitled to recover from each of the other insurers, only by inter-company arbitration or inter-company agreement, an equitable pro-rata share of the benefits paid.

    Summary of N.J.S.A. 39:6A-11

    If a person is entitled to PIP/APIP benefits under more than one policy, then:

    Notes on N.J.S.A 39:6A-11

    N.J.S.A. 39:6A-6 Recovery of PIP from a Worklers' Compensation Carrier.

    39:6A-6 Collateral source.

    The benefits provided in sections 4 and 10 of P.L. 1972, c. 70 (C.39:6A-4 and 39:6A-10), the medical expense benefits provided in section 4 of P.L. 1998, c. 21 (C. 39:6A-3.1) and the benefits provided in section 45 of P.L. 2003, c. 89 (C. 39:6A-3.3) shall be payable as loss accrues, upon written notice of such loss and without regard to collateral sources, except that benefits, collectible under workers' compensation insurance, employees' temporary disability benefit statutes, Medicare provided under federal law, and benefits, in fact collected, that are provided under federal law to active and retired military personnel shall be deducted from the benefits collectible under sections 4 and 10 of P.L. 1972, c. 70 (C. 39:6A-4 and 39:6A-10), the medical expense benefits provided in section 4 of P.L. 1998, c. 21 (C. 39:6A-3.1) and the benefits provided in section 45 of P.L. 2003, c. 89 (C. 39:6A-3.3).

    If an insurer has paid those benefits and the insured is entitled to, but has failed to apply for, workers' compensation benefits or employees' temporary disability benefits, the insurer may immediately apply to the provider of workers' compensation benefits or of employees' temporary disability benefits for a reimbursement of any benefits pursuant to sections 4 and 10 of P.L. 1972, c. 70 (C. 39:6A-4 and 39:6A-10), medical expense benefits pursuant to section 4 of P.L. 1998, c. 21 (C. 39:6A-3.1) or benefits pursuant to section 45 of P.L. 2003, c. 89 (C. 39:6A-3.3) it has paid.

    Summary of N.J.S.A. 39:6A-6:

    Notes on N.J.S.A 39:6A-6:

    Other selected New Jersey laws related to subrogation.

    Primary, excess, and co-primary coverage.

  • NJ does not allow tort subrogation against a "public entity" or a "public employee". N.J.S.A. 59:9-2(e) states that "[n]o insurer or other person shall be entitled to bring an action under a subrogation provision in an insurance contract against a public entity or public employee." Notes:
  • Uninsured/Underinsured Motorist Subrogation (UM/UIM)

  • If insurance coverage is denied/rescinded, then any motor vehicle insurance that is required by state law may still be available to third parties who were not part of the wrongdoing that led to the coverage being denied/rescinded. This is a rule that grows partially out of statute, N.J.S.A.39:6-48, and partially out of common law, as is recognized in New Jersey Mfrs. Ins. Co. v. Varjabedian, 391 N.J. Super. 253, 256 (App.Div.) certif. denied 192 N.J. 295 (2007)("Based in part upon the non-cancellation provisions of N.J.S.A. 39:6-48, we have held that a carrier is not entitled to retroactively void a policy after its insured becomes liable to an innocent third party for damages."). Note that an insurer rescinding a malpractice policy does not need to provide coverage to innocent third parties even though such coverage may be required by state law. Demarco v. Stoddard, ___ N.J. ___ (2015)(available online here for the moment).

    The "state minimum" liability coverage that such policies must provide for innocent third parties is 15/30/5 per NJM v. Varjabedian dispite the fact that, technically, New Jersey allows a "basic" policy for automobiles that provides 0/0/5 coverage per N.J.S.A. 39:6A-3.1 (and a 0/0/0 "special" policy is available for certain eligible persons with low income pursuant to N.J.S.A. 39:6A-3.3). In N.J.M., the court found that despite its insured’s misrepresentation regarding her daugthter's driver’s license status, the insurer was required to provide state minimum liability coverage for an injured innocent third party. C.f. Marotta v. New Jersey Auto. Full Ins. Underwriting Assoc. By and Through Liberty Mut. Ins. Co., 280 N.J. Super. 525 (App.Div. 1995) holding state minimum coverage to apply for protection of innocent third parties where the insured had misrepresented the state of residency. In Cure v Perez, 223 N.J. 143 (2015) the New Jersey Supreme Court effectively agreed with the Varjabedian decision indicating that, in general, a rescinded policy will still need to provide 15/30/5 coverage despite the legislature's creation of the "basic" and "special" policies. However, since the policy in question in Cure v Perez was a "basic" policy with the optional $10,000 bodily injury liability coverage, CURE was only required to provide $10,000 in coverage for the innocent third party. In its last sentence, the Supreme Court indicated (in dicta that it refered to as a "holding") that if a policy had no liability coverage at all (i.e. a "special" policy or a "basic" policy without the optional $10,000 in coverage) an insurer rescinding the policy would not owe any liabiilty coverage for an innocent third party.

    The "state minimum" PIP coverage to be provided to innocent third policies is $15,000 in standard PIP coverage pursuant to N.J.S.A. 39:6A-4.3(e) (up to $250,000 is avaialble for certain significant injuries). Rutgers Cas. Ins. Co. v. LaCroix, 194 N.J. 515, 532-533 (2008).

    Where a policy has an exclusion that would result in no protection of innocent third parties, the exclusion will likely be invalid and at least state minimums will apply, see e.g. Proformance Ins. Co. v. Jones, 185 N.J. 406 (2005)(policy with business use exclusion), Hanco v. Sisoukraj, 364 N.J. Super. 41 (App.Div. 2003)(policy with exclusion for liability of lessor of vehicle), Alvarez v. Norwood, 2012 N.J. Super. Unpub. LEXIS 910 (App.Div. Apr. 25, 2012) Certif. denied 216 N.J. 6 (2013)(unscheduled driver), compare Connecticut Indem. Co. v. Podeszwa, 392 N.J.Super. 480 (App.Div. 2007) approving of a "bobtail" policy which excluded coverage where other valid coverage was in place. As to whether the full policy limits will apply, see discussion below, "If an insurance policy needs to be reformed, the changes may (or may not) only apply to provide the statutory minimum coverage." We are not aware of any New Jersey authority for whether denial of coverage for lack of cooperation may be asserted against an innocent third party. However, Cowan v. Allstate Ins. Co., 357 S.C. 625 (S.C. 2004) is persuasive authority indicating that such a denial should not be enforceable against an innocent third party and at least state minimums should apply.

    An interesting question is whether an insurer of an innocent third party may take advantage of the fact that the tortfeasor's insurance must provide minimum coverage to an innocent third party even when the tortfeasor's insurance rescinds coverage. For instance, if an insurer pays an uninsured motorist claim to its insured because the tortfesaor's insurer rescinded coverage, can the insurer attempt to subrogate against the tortfeasor's carrier? Alternatively, may a UM/UIM carrier reduce its benefits available by the 15/30 coverage that the tortfeasor's insurer must still provide? One might argue that since the purpose of this rule is to make sure that innocent victims do not go unprotected, there is no reason to apply the "inncocent third party rule" if the innocent third party is protected by his or her own UM/UIM coverage. On the other hand, the tortfeasor's carrier contracted for certain risks including the risk that it would have to pay out on a rescinded policy and perhaps the rescinding carrier has some responsibilty for not not investigating its policy prior to the loss. Additionally, a subrogating carrier stands in the shoes of its insured, which is the innocent third party who has a valid claim against the tortfeasor's carrier. We are not aware of any case law on this point, however, some indication of the answer to this question may come from Cure v Perez discussed in this section. In Cure v Perez, CURE argued, 223 N.J at 149, that since it rescinded its policy, the benefits of its obligation to pay an innocent third party "should be provided to only those third parties who do not have first party uninsured/underinsured motorist (UM/UIM) coverage, as the UM/UIM carrier should be the insurer chiefly liable for damages." Although the New Jersey Supreme Court did not directly respond to this argument, it still found that CURE had to provide coverage to the innocent third party even though the injured party had insurance with Progressive, thus suggesting that the tortfeasor's insurer's obligation to pay state minimum coverage takes precedence over the innocent third party's insurer's obligations.

  • If an insurance policy needs to be reformed, the changes may (or may not) only apply to provide the statutory minimum coverage. From time to time, a New Jersey court may find that the provisions of an insurance policy, for instance a policy provision denying coverage for liability of certain people, violate NJ insurance requirements. The court will then reform the policy to be consistent with NJ requirements. An interesting question arises as to whether, if the policy were for more than NJ’s 15/30/5 requirements, the reformed policy language applies for the policy’s face value or only for the 15/30/5 coverage required by New Jersey law. The New Jersey courts are inconsistent on this point.

    In Proformance Insurance Co. v. Jones, 185 N.J. 406 (2005), the New Jersey Supreme Court found that a policy that excluded coverage for liability arising from using a vehicle in the course of business was invalid. The court, however, held that the reformed policy would apply only to the state minimum required coverage. The court applied the same logic that NJ courts applied in the case where coverage was denied for material misrepresentation. See e.g. Marotta v. New Jersey Automobile Full Insurance Underwriting Assn., 280 N.J. Super. 525 (App. Div.) aff'd, 144 N.J. 325 (1996) and further discussion above. The court reasoned that the innocent third party who was injured in the accident only had the right to presume that the vehicle causing the injury would have 15/30/5 coverage.

    On the other hand, in Potenzone v. Annin Flag Co., 191 N.J. 147 (N.J. 2007), the New Jersey Supreme Court found an exclusion for loading and unloading to be invalid, and held that the full policy limits applied to the reformed policy. The Court was aware of the analysis in Proformance, and decided to "choose[] a different path here." Id. at 155. The Court argued that the loading-and-unloading exclusion was different, because there was long-standing precedent that such exclusions were unenforceable, and therefore the carrier should have expected that its exclusion would be invalid and its full policy would apply.

    Craig & Pomeroy, New Jersey Auto Insurance Law §2:3-4 criticizes the Proformance case. The authors note that Proformance’s reliance on Marotta is misplaced, because Marotta involved a valid disclaimer of coverage due to an insured’s misrepresentation, while the only denial of coverage in Proformance was due to the insurer including an impermissible exclusion in the policy. The authors note that the insured in Proformance ended up exposed to liability above their now 15/30/5 coverage through no fault of their own and after having paid for greater policy limits. Craig & Pomeroy also criticize Potenzone’s attempt to distinguish itself from Proformance. Potenzone argued that there was long-standing precedent that loading-and-unloading exclusions were unenforceable, and therefore the carrier should have expected that its exclusion would be invalid and its full policy would apply. The authors note that this argument ignores the fact that the type of exclusion in the Proformance case, the business use exclusion, had been clearly unenforceable since at least 1990.

    Craig & Pomeroy argue that the only valid distinction between these two cases is that in Proformance, where the business use exclusion was stricken, but the policy was reduced to state minimums, the at-fault party was a permissive user of the vehicle, rather than a named insured; whereas in Potenzone, where the loading and unloading exclusion was stricken and the policy remained in full force, the at-fault party was the the named insured. The authors argue that, “First-party insureds have every reason to believe that offending clauses will merely be struck and they will be left in the same position as would have applied without the offending clause. Third-party insureds, on the other hand, could not have formed any expectations as to coverage beyond the statutory minimums. While Craig and Pomeroy’s criticism of Proformance is well placed, the attempt to harmonize Proformance and Protenzone, is perhaps more forgiving than it should be. While the expectations of the parties may be significant, one could easily argue that a permissive user of a vehicle is an intended third-party beneficiary of the insurance contract, and therefore any expectations of insurance that the named insured has should also translate to the permissive user. It may be reasonable to assume that the Supreme Court in Potenzone was not happy with the Proformance decision, and given the opportunity would reverse it in its entirety. Note that in the unpublished case of Mantzouranis v. Pratolongo, 2015 N.J. Super. Unpub. LEXIS 2161, 15-19 (App.Div. Sept. 10, 2015) the Appellate Division declined to distinguish Proformance and Protenzone on the basis of the expectations of the parties, and held that a policy with an exclusion of coverage for a valet-parker must apply its full policy because it was well known for decades that such an exclusion was unenforceable.

    A number of other cases are worthy of note on this subject. In Hanco v. Sisoukraj, 364 N.J. Super. 41 (App.Div. 2003), a lessor’s insurance policy excluded coverage for liability of the lessee. The offensive language was stricken, and the policy reduced to state minimums. It seems that this case can be justified, even in light of Protenzone, since a lessee is not an intended beneficiary of the lessor’s policy. Similarly, Alvarez v. Norwood, 2012 N.J. Super. Unpub. LEXIS 910 (App.Div. Apr. 25, 2012) held that a policy excluding unlisted drivers was reduced to state minimum coverage, and noted in distinction to Protenzone that, “[w]e find no comparable grounds to conclude that [the insured] or [the insurer] should have expected that the full policy limits would apply to accidents involving a principal driver of the insured taxi who was omitted from the application and the policy.” Here, also, it is significant to note that there was some wrongdoing on the part of the insured, by not listing its driver.

    In Kish v. Motor Club of Am. Ins. Co., 108 N.J. Super. 405 (App. Div.) , certif. denied, 55 N.J. 595 (1970), an exclusion for liability for injuries to family members was found invalid, and the policy held to remain in for its full value. The court noted, “... N.J.S.A. 39:6-46(a) in specifying the scope of the omnibus coverage to be afforded by an owner's policy, makes no distinction between a policy containing the minimum statutory limits and one embodying higher limits. In either case, a provision limiting the broad omnibus coverage called for by N.J.S.A. 39:6-46(a) would be contrary to law.” Id. at 412. The Kish case was recently sited by Khandelwal v. Zurich Ins. Co., 427 N.J. Super. 577 (App.Div.), certif. den. 212 N.J. 430 (2012) which held that a supplemental automobile insurance policy could not exclude coverage for injuries to family members.

    In conclusion, although there is some apparently contradictory authority, the weight of authority seems to be that where an insured, through no fault of his or her own, is denied coverage due to an invalid policy exclusion, the full policy will apply. Where the insured engaged in some wrongdoing which triggered the exclusion, or where the insured cannot be said to have a valid expectation for full policy limits to apply, the reformed policy may apply only to minimum state insurance requirements.

  • Owner Of Motor Vehicle Not Vicariously Liable Absent Agency (which is a rebuttable presumption). The owner of a motor vehicle is not liable for the negligence of another person who operated the owner's motor vehicle, unless the operator was operating as an agent of the owner (e.g. an employee). There is a rebuttable presumption that the person operating another person's auotomobile is doing so as that person's agent. Hernandez v. Velez, 267 N.j. Super. 353, 356 (Law. Div. 1993), Harvey v. Craw, 110 N.J. Super. 68, 73, (App.Div. 1970). However, in the private motor vehicle context, this presumption will often be rebutted. Therefore, it is important to think of other grounds upon which the owner of a motor vehicle might be found liable, for instance nelgligent entrustment or negligent maintenance of the vehicle.
  • Recovering Payments Made in Error Where Another Insurer Should Have Provided Coverage: Where an insurer pays a claim in error that should have been paid by another insurer, the erroneously-paying insurer can probably seek reimbursement from the proper insurer. In Martin v. Home Ins. Co., 276 N.J. Super. 378 (App. Div.) affirmed in part and reversed in part on other grounds 276 N.J. Super. 378 (1994), a health insurer erroneously covered bills on a NJ car accident. The court wrote that "it was Progressive's duty to pay Robinson's medical expenses, and New York Life is entitled to reimbursement from Progressive for benefits paid[,]" Id. at 396, though it provided little analysis for the right of recovery. Though Martin was reversed on other grounds, the New Jersey Supreme Court explicitly upheld Martin's finding that Progressive had to reimburse New York Life. 141 N.J. 279, 283 fn2 (1995). In Pratts v. Hulme, 2007 N.J. Super. Unpub. LEXIS 665, (App.Div. Dec. 20, 2007), an auto insurer paid PIP benefits under the mistaken belief that it was required to do so purusuant to the deemer statute and then sought recovery from the insurer that was actually liable to pay PIP benefits. The Appellate Division held that the erroneously paid claims should be reimbursed based on a theory of unjust enrichment. 2007 N.J. Super Unpub. LEXIS at 6-8. Note that, as discussed above the Pratts case said that the procedures of recovery under N.J.S.A. 39:6A-11 (i.e. mandatory arbitration) applied to this claim for reimbursement, which is at least a questionable conclusion.
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