Plaintiff recovered a judgment against defendants in the amount of $514,712.86 ($400,000 plus $114,542.46 prejudgment interest and costs of $170.40) on May 4, 1984. Defendants were insured by Commercial Union Insurance Companies in the amount of $100,000 and by Ohio Casualty Insurance Company in the additional amount of $100,000. These policy limits (plus $3,813.70 representing postjudgment interest) were paid to plaintiff after the exhaustion of appellate proceedings. Commercial Union's policy contained the following language:
The company will pay, in addition to the applicable limit of liability: (a) all expenses incurred by the company, all costs taxed against the insured in any suit defended by the company and all interest on the entire amount of any judgment therein which accrues after entry of the judgment and before the company has paid or tendered or deposited in Court that part of the judgment which does not exceed the limit of the company's liability thereon. . . .
Ohio Casualty made a like promise in slightly different language:
To pay, in addition to the applicable limits of liability: (a) all expenses incurred by the company, all costs taxed against the insured in any such suit and all interest on the entire amount of any judgment therein which accrues after entry of the judgment and before the company has paid or tendered or deposited in Court that part of the judgment which does not exceed the limit of the company's liability thereon. . . .
Plaintiff claims that both companies therefore have an obligation to pay accrued interest on the full amount of the judgment. The companies, however, argue that their obligation is to pay interest only on the policy limits of $100,000 each. The issue is presented by crossmotions for summary judgment. There are no disputed facts; this opinion grants plaintiff's motion.
Only one case in New Jersey has addressed the issue: Germer v. Public Service Mutual Ins. Co., 99 N.J. Super. 137 (Law
Div.1967). In Germer, the insurance policy obligated the company to pay:
Germer held that the words "all interest accruing after entry of judgment" required payment of interest "on the entire judgment irrespective of the policy limits." Id. at 144. Plaintiff reads the instant policies in the same way.
When construction is necessary, insurance policies are to be read liberally to the end that coverage is provided. Kievit v. Loyal Protective Life Ins. Co., 34 N.J. 475, 482 (1961). The reasonable expectations of the insured must be considered. Harr v. Allstate, 54 N.J. 287 (1969). Some construction of defendants' policies is necessary; little is required, however, with respect to the "entire judgment" issue. In this regard, the policy language is clear. Defendant companies agreed to pay "all interest on the entire amount of any judgment." Emphasis supplied. Thus, they clarified the policy language addressed in Germer. In that case, the policy language was not clear; it obligated the insurer to pay "all interest accruing after entry of judgment." The court read this language as requiring payment of interest on the entire judgment. Here, the policy language expressly refers to the "entire amount of any judgment."
It may be assumed that the policies of defendant companies were written with an awareness, not only of Germer, but of cases cited in that opinion from other jurisdictions all of which point to the interest question. Germer, supra 99 N.J. Super. at 142. See Mayberry v. Home Insurance Co., 264 N.C. 658, 142 S.E. 2d 626 (Sup.Ct.1965); Powell v. T.A. & C. Taxi, Inc., 104 N.H. 428, 188 A.2d 654 (Sup.Ct.1963); Highway Casualty Co. v. Johnston, 104 So. 2d 734 (Fla.Sup.Ct.1958); Underwood v. Buzby, 236 F.2d 937 (3 Cir.1956). River Valley Cartage Co. ...