On certification to the Superior Court, Appellate Division.
For affirmance -- Justice Sullivan, Clifford, Schreiber and Handler and Judges Conford and Halpern. For reversal -- Justice Pashman. The opinion of the court was delivered by Clifford, J. Pashman, J., dissenting.
This declaratory judgment action was instituted to determine the scope of coverage under a standard family automobile policy of insurance. The controversy derived from a one-vehicle accident of May 1, 1968. The automobile involved was a 1956 DeSoto owned by Mike & Joe's Texaco Station, a service station business in which plaintiff Generoso DiOrio was one of two general partners. At the time of the accident Generoso's 17 year-old son, plaintiff Gennaro DiOrio, a member of the same household, was operating the car. A passenger, defendant Jon Leigh Palmer, an infant, sustained severe personal injuries in the accident. Suit was brought on his behalf against the DiOrios, father and son,*fn1 and against the service station.
Reliance Insurance Company, liability carrier of Mike & Joe's Texaco Station, offered the Palmers its full policy limit of $50,000. This being inadequate fully to compensate for the passenger's injuries and damages, excess coverage was sought from defendant New Jersey Manufacturers Insurance Company (NJM) under the DiOrio family automobile policy. NJM disclaimed, whereupon the present suit followed.
The trial court, noting that there was no coverage under NJM's policy for a non-owned automobile "furnished for the regular use of either the named insured or any relative,"*fn2 ruled in favor of the insurance carrier after finding that the DeSoto had been furnished for the regular use of the named
insured's son, Gennaro. The Appellate Division affirmed the judgment for NJM on that basis.
Thereafter this Court, in a divided decision, reversed the judgment, 63 N.J. 597 (1973) (hereafter DiOrio I), holding that the courts below had erred in concluding that the automobile was furnished to the son for his regular use. However, we remanded to the trial court for further proceedings addressed to two issues, namely, whether the DeSoto automobile was furnished for the regular use of the father, and whether excess coverage is denied to all insureds (and thus to the son) if the vehicle was furnished for regular use of any insured (here, the father) even though not furnished for the regular use of the insured claiming coverage (the son). In DiOrio I we concluded as to the first stated issue that the facts had not been adequately developed below and that the trial court had made no finding as to whether the vehicle was furnished for the regular use of Generoso, the father. 63 N.J. at 608. The second issue we characterized as "probably one of law to be resolved in the light of a full record." Id. at 607.
Upon the remand the trial court conducted the necessary hearing and made detailed findings and conclusions leading to a dismissal of the complaint. It held that the NJM policy afforded no excess liability coverage to plaintiffs because the service station partnership's DeSoto had been furnished for the regular use of Generoso, and hence the limitations in the policy's non-owned automobile provisions withheld protection from his son, Gennaro.
The Appellate Division affirmed essentially for the reasons expressed in the comprehensive opinion of the trial court. We granted certification, 75 N.J. 540 (1977), to review this determination. We affirm.
The policy as to which excess coverage is sought is denominated by NJM as a family automobile policy, a standard
form policy first filed*fn3 in New Jersey and 47 other states in 1956. As observed by the trial court, its predecessor was the basic automobile liability policy, which continued in use after introduction of the family automobile policy for those partnerships, corporations and businesses not eligible for family automobile policy coverage. The family automobile policy extended coverage to relatives not included in the basic automobile policy, at no additional premium for this additional coverage.
The policy in question provides, on the first page of four pages, that NJM will
pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of [bodily injury and property damage] arising out of the ownership, maintenance or use of the owned automobile or any non-owned automobile * * *.
And on the same page a "non-owned automobile" is defined, in language which has remained unchanged for 20 years, as
an automobile * * * not owned by or furnished for the regular use of either the named insured or any relative * * *.
This latter language concerning non-owned automobiles is the current standard version of "drive other cars" coverage. The purpose of such coverage is generally recognized to be
to cover occasional or incidental use of other cars without the payment of an additional premium, but to exclude the habitual use of other cars, which would increase the risk on the insurance company without a ...