Doan, J.s.c., Temporarily Assigned.
[146 NJSuper Page 81] Plaintiff Broadway Bank and Trust Company (Broadway) is a New Jersey banking corporation authorized to conduct an insurance premium financing business in accordance with N.J.S.A. 17:16D-1 et seq. , the Insurance Premium Finance Company Act. As part of its operation, Broadway enters into "financing agreements" with prospective insureds. These agreements provide that insureds will repay Broadway the value of all premiums furnished plus finance charges, and that insureds thereby assign to Broadway all rights which they may acquire to any unearned premiums. Premiums are then forwarded by Broadway to a designated carrier, along with printed notice of the financing agreement as well as the assignment.
Defendant, the New Jersey Property-Liability Insurance Guaranty Association (Association), was created by N.J.S.A. 17:30A-1 et seq. effective April 11, 1974, and consists of a private, nonprofit, unincorporated legal entity. The express purpose of the Association is to provide
Gateway Insurance, of Pennsylvania (Gateway) has conducted itself as an insurance carrier in New Jersey until its insolvency was declared on August 21, 1974 by the Commonwealth Court of Pennsylvania. On August 28 of the same year James J. Sheeran, Commissioner of Insurance of the State of New Jersey, was appointed as Gateway's ancillary receiver in New Jersey.
The Joint Underwriting Association (JUA) was created by N.J.S.A. 17:30B-1 et seq. , effective September 19, 1974, for the express purpose of
Pursuant to its financing agreements, Broadway forwarded insurance premiums to Gateway prior to the latter's insolvency on August 21, 1974. Thereafter, notice was given to all policyholders, creditors, obligees and claimants of Gateway by the ancillary receiver that all Gateway insurance contracts and policies were cancelled as of September 21, 1974, unless they had otherwise expired before that date.
Notice was also given by the Commissioner that due to Gateway's insolvency, the Association had become obligated to the extent of certain covered claims incurred 30 days before or after the date of insolvency. Broadway now seeks to recover from the Association as a covered claim the unearned insurance premiums it had previously forwarded to Gateway.
Plaintiff moves for partial summary judgment urging that its claim against defendant for unearned insurance premiums previously paid the insolvent Gateway falls within the definition of "covered claim" as set forth in the New Jersey Property-Liability Insurance Guaranty Association Act (the Guaranty Act), N.J.S.A. 17:30A-5(d).
The first issue presented for determination is whether plaintiff's claim for unearned premiums constitutes a "covered claim" within § 5(d) of the Guaranty Act. This section provides that
"Covered claim" means an unpaid claim, including one of unearned premiums , which arises out of and is within the coverage, and not in excess of the applicable limits of an insurance policy to which this act applies, issued by an insurer, if such insurer becomes an insolvent insurer after January 1, 1974, and (1) the claimant or insured is a resident of this State at the time of the insured event; or (2) the property from which the claim arises is permanently located in this State. "Covered claim" shall not include any amount due any reinsurer, insurer, insurance pool, or underwriting association, except for any Special Joint Underwriting Association within the meaning of the Joint Underwriting Association Act (N.J.S.A. 17:30B-1 et seq.), as subrogation recoveries or otherwise. [Emphasis supplied]
It is thus apparent that a claim for unearned premiums can represent a "covered claim" assertable against the Association under certain circumstances, leaving the narrower question of ...