[110 NJSuper Page 183] Plaintiff entered into a contract with the County of Union to construct an automobile parking building and juvenile detention center in Elizabeth, New Jersey. To protect itself against certain risks incident to the project it sought and obtained policies of insurance from Employers' Surplus Lines Insurance Company (Employers), Aetna Casualty & Surety Company (Aetna) and Employers Mutual Liability Insurance Company of Wisconsin, generally or often referred to as Employers Mutuals of Wausau (Wausau). After completion or near completion of the structure, alleged defects of a serious nature appeared in the design and construction of the building. On or about June 1, 1967 suit was instituted by the County of Union against plaintiff, as general contractor, as well as against the architect, engineer and corporate surety on plaintiff's performance and completion bond. The complaint alleged negligence, improper construction and a failure to adhere
to proper standards. Plaintiff turned to each of the three carriers mentioned above, demanding that they agree to indemnify it as to any liability that might arise from the suit and that they provide a defense to the action. Each carrier disclaimed, contending that the asserted coverage did not exist. Thereupon plaintiff instituted this suit seeking, among other things, a declaratory judgment as to the interpretation of each policy -- specifically, as to whether the asserted coverage did or did not exist. After answers had been filed plaintiff moved for judgment on the pleadings or for partial summary judgment against each of the three carriers, as well as for other incidental relief. The motions for summary judgment go only to the issue as to the interpretation of the three policies. Other issues projected in the complaint are not involved. Defendant Wausau thereupon filed a cross-motion for summary judgment on the basic coverage issues.
It will be convenient to consider Wausau's motion first. The policy in question is long and complicated. It consists of a basic document of six printed pages to which are appended a declarations sheet, two pages of schedules containing descriptions of the insured hazards and various premium data, followed by 16 separate endorsements. The effective date of all endorsements is the same as the effective date of the policy. Plaintiff complains that the result is a composite document filled with ambiguities and well nigh incomprehensible. There is no doubt that it is difficult to read but I do not find it incomprehensible.
Two points deserve mention. In the first place, it is important to bear in mind the difference between complexity and ambiguity. This was a complex underwriting transaction; it did not lend itself to simplicity of expression or format. Complexity born of necessity is not to be confused with ambiguity, whether accidental or artful. Secondly, this type of policy, consisting of a basic printed document extensively modified by endorsements both enlarging and limiting the scope of coverage, seems to lend itself to
liability underwriting where an undertaking presents a variety of risks and hazards with respect to which protection is sought. The basic document is in effect modified and tailored by endorsements to conform to the precise underwriting requirements. 1 Long, The Law of Liability Insurance , § 10.02.
Coming now to the terms of the policy itself, the applicable insuring agreement in the basic document affords broad coverage with respect to property damage liability, the insurer agreeing "[t]o pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of injury to or destruction of property, including the loss of use thereof, caused by accident." With respect to contractual liability coverage (Endorsement No. 4), it agrees "[t]o pay on behalf of the insured all sums which the insured, by reason of the liability assumed by him under any written contract designated in the schedule, shall become legally obligated to pay as damages because of injury to or destruction of property, including the loss of use thereof, caused by accident."
Turning from the insuring agreements to the exclusions, we find in the basic document that the policy does not apply "(h) * * * to injury to or destruction of * * * (4) any goods, products or containers thereof manufactured, sold, handled or distributed or premises alienated by the named insured, or work completed by or for the named insured, out of which the accident arises; * * *." (Emphasis supplied). In the endorsement describing the contractual liability coverage there is an identical provision appearing in paragraph (i) under the heading "Exclusions."
Endorsement No. 1 contains a provision which specifically replaces subparagraph (h) of the exclusions contained in the basic document. It reads as follows:
Broad Form Property Damage Coverage
It is agreed that exclusion H of the policy and (H) of the contractual liability coverage endorsement are replaced by the following:
Under coverage B of the policy and L of the contractual liability coverage endorsement.
1. To injury to or destruction of property owned or occupied by or rented to the insured, property held by the insured for sale or property entrusted to ...