Submitted January 21, 1998 - Decided February 20, 1998
Before Judges Long, Kleiner and Kimmelman.
The opinion of the court was delivered by: Kimmelman, J.A.D.
The issue on appeal arises under circumstances in which each of two insurance carriers afforded primary coverage for the happening of the same accidental injury. This court is asked to determine what percentage of liability each carrier must bear to cover the loss.
Plaintiff insures Mr. Goodlube, an automobile service center, with liability coverage in the amount of $1,000,000. Defendant insures the leased car of a particular Mr. Goodlube customer with liability coverage in the amount of $300,000. After completing the servicing work on that car, a Mr. Goodlube employee backed it out of the garage and accidentally struck and injured a pedestrian. The injured pedestrian made claims against both Mr. Goodlube and its employee and the owner of the car.
Plaintiff insured Mr. Goodlube and its employee for the happening of the accident. Defendant insured the authorized driver and the car which accidentally struck the pedestrian. Both carriers acknowledge that their policies afforded primary coverage for the injuries sustained by the pedestrian, who has commenced a legal action. Plaintiff argues that the two carriers should contribute equally to payment of the claim. Defendant argues that the payment of the claim should be on a pro rata basis, determined by the respective policy limits. Since the total available primary coverage is $1,300,000 ($1,000,000 from plaintiff plus $300,000 from defendant), defendant claims responsibility for $300,000/$1,300,000 or 23% against 77% for plaintiff.
On plaintiff's motion for summary judgment in its declaratory judgment action to determine the parties' respective responsibility for payment of the injured pedestrian's claim, the trial court rejected plaintiff's contention and ruled that the carriers must share responsibility on a pro rata basis. Plaintiff appeals.
In consideration of this matter, our initial function is to construe the insurance policies as written, in an effort to find the meaning and purpose of each with respect to responsibility for payment of the claim in question. See Royal Ins. Co. v. Rutgers Cas. Ins. Co., 271 N.J. Super. 409, 416 (App. Div. 1994). Where two carriers are each primarily liable, we must examine the "Other Insurance" clause of each policy to determine whether there exists language which may govern the contribution each party should make to payment of the claim when adjusted.
Under the heading "Other Insurance," plaintiff's policy is silent as to the method of sharing responsibility when other coverage is available. It simply provides: "The insurance afforded by this policy is primary[.]" No exception or limitation is provided in plaintiff's policy regarding the payment of the claim here involved. On the other hand, defendant's policy is more specific. It provides under its "Other Insurance" clause, in pertinent part, as follows:
When there is other applicable insurance, we will provide coverage as follows:
b. During the first and subsequent years of this policy for those exposures shown effective in the coverage summary, we will pay only our share of the loss. Our share is the proportion that our limit of liability bears to the total of all applicable limits.
We do not find this case to be controlled, as plaintiff urges, by the decision in Cosmopolitan Mut. Ins. Co. v. Continental Cas. Co., 28 N.J. 554 (1959). In Cosmopolitan, a leased vehicle being used in the business of a news delivery company was involved in an accident while being operated by one of its employees. At the time of the accident, the news company and its employee were covered by a liability insurance policy issued by Cosmopolitan and the leased vehicle was covered by a policy issued by Continental. Id. at 556-57. Both policies extended coverage for the accident, but each policy contained an "Other Insurance" clause ...