On appeal from Superior Court, Law Division, Ocean County.
O'Brien and Landau. The opinion of the court was delivered by Landau, J.s.c. (t/a).
This is an appeal by the New Jersey Property-Liability Guarantee Association (Association) from an order of the Superior Court, Law Division, which determined that the $300,000 limitation as to each covered claim referred to in N.J.S.A. 17:30A-8 a.(1) remains subject to actual policy limits of the insolvent carrier until the statutory dollar maximum is exhausted. We affirm.
Roy Blew, an employee of Dave's Texaco, was driving a tow truck owned by Brind Leasing when it rear-ended and injured Teri Sitton in 1983.
Blew and Dave's Texaco were insured for $500,000 by Ideal Insurance Co., now insolvent and statutorily succeeded by the
Association under the New Jersey Property-Liability Insurance Guarantee Association Act N.J.S.A. 17:30A-1, et seq. Brind was insured for $1,000,000 by Hartford Insurance (Hartford).
Sitton's liability claims have been settled for a total sum of $300,000 payable by Hartford and the Association, after the trial court determined that each must provide primary liability coverage for Blew and Dave's Texaco. The latter determination is not in dispute. Rather, Hartford contends that the responsibility of the Association and Hartford under the settlement should be in the proportion that their respective policy limits bear to total primary coverage. So construed, Hartford would pay 2/3 (i.e., $1,000,000/$1,500,000) of the $300,000 settlement.
The Association says its pro rata share should be computed based upon its maximum statutory exposure of $300,000, provided under N.J.S.A. 17:30A-8 a(1), rather than the Ideal policy limit of $500,000. Thus, it would be responsible only for 3/13 (i.e., $300,000/$1,300,000) of the settlement.
The Association correctly notes that the question of what amount a pro rata share should be based on when the policy limits exceed the statutory maximum, is a matter of first impression.
Although the Association refers to this as a "perplexing question" we agree with the respondent Hartford that the statute is clear and unambiguous, and resolves this issue. N.J.S.A. 17:30A-8 a(2) provides that the Association shall "be deemed the insurer to the extent of its obligation on the covered claims and to such extent shall have all rights, duties, and obligations of the insolvent insurer as if the insurer had not become insolvent." (Emphasis supplied)
A "covered claim" is defined in N.J.S.A. 17:30A-5 d as an "unpaid claim . . . which arises out of and ...