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Agency Rent-A-Car Inc. v. Indemnity Insurance Co.

Decided: September 30, 1993.

AGENCY RENT-A-CAR, INC., PLAINTIFF-RESPONDENT,
v.
INDEMNITY INSURANCE COMPANY OF NORTH AMERICA, RELIANCE INSURANCE COMPANY OF NEW YORK, DEFENDANTS-APPELLANTS, AND SECURITY COURIER SERVICES, INC., DEFENDANT



On appeal from the Superior Court of New Jersey, Law Division, Atlantic County.

Pressler, Dreier and Kleiner. The opinion of the court was delivered by Dreier, J.A.D.

Dreier

Defendants appeal from a summary judgment declaring plaintiff's self-insurance obligations for four underlying bodily injury and wrongful death cases to be limited to $30,000.

Plaintiff, Agency Rent-A-Car, applied for and received a Self-Insurer Certificate from the Division of Motor Vehicles effective February 27, 1981.*fn1 In June 1990, plaintiff rented a car to defendant Security Courier Services, Inc. On June 21, 1990, one of Security's employees was involved in a head-on collision while driving the leased Agency vehicle. Five deaths resulted from the collision, including that of Security's driver. Four separate actions arose from the accident in which Security and its driver's estate were named as defendants. These four cases settled for a total amount of $475,000.

At the time of the June 21, 1990 accident, plaintiff was self-insured up to $500,000.*fn2 In its accident and claim activity report to the State of New Jersey, Department of Insurance, plaintiff reported its liability per accident as $15,000/$30,000/$5,000 ($15,000 per accident for single injury; $30,000 per accident for multiple injuries; $5,000 per accident for property damage). To the date of this accident, plaintiff reported to the Insurance Department that it had paid two bodily injury and seventy-three property damage claims from a total of 160 accidents.

After hearing the arguments of counsel and discussing the peculiar nature of self-insurance, the trial Judge concluded:

What we have here is . . . a contractual undertaking by which [plaintiff] and Security agreed by its contract through which Security obtained possession of this vehicle that [plaintiff] would provide liability protection to the extent of 15,000 for one injury, 30,000 for one accident. That is what the parties contracted. And the defendants here are asking this Court to find as a matter of law that the contract between those parties conflicted with the public policy of this State as reflected in Ryder*fn3 and would thereby subject [plaintiff] to footing the bill up to $500,000 before there is any insurance that would be provided by either of the defendants here or the excess carrier for Security, which had been Lexington and I believe General Star.

And the question is a very simple one. Does Ryder mandate that this Court ignore the provisions of Title 45, which required minimum coverage of 15 and 30, and the contract between the parties that such protection would be provided? I think not.

Defendants Reliance and Indemnity filed separate notices of appeal which were consolidated by order dated August 31, 1992.

The issues in this consolidated appeal focus solely on the coverage afforded by plaintiff to Security.

Every automobile lessor, regardless of whether it is an approved self-insurer, must carry liability insurance. Such ...


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