The opinion of the court was delivered by: Zazzali, J.
Chief Justice Poritz PRESIDING
On certification to the Superior Court, Appellate Division, whose opinion is reported at 327 N.J. Super 360 (2000).
The question presented in this appeal is whether a policyholder's failure to read his policy may be asserted as comparative negligence in a professional malpractice action against an insurance broker. In a published opinion, the Appellate Division reversed a jury verdict in favor of the insureds and held that the trial court should have instructed the jury on comparative negligence for the failure to read the policy. Aden v. Fortsh, 327 N.J. Super. 360 (App. Div. 2000). We reverse. In New Jersey, the comparative fault defense traditionally "will not apply in a plaintiff's suit alleging a professional's malpractice, at least in those cases in which the defendant argues that the plaintiff was at fault in failing to understand or to perform the task for which the professional was hired." Brian E. Mahoney, New Jersey Comparative Fault and Liability Apportionment § 6:2-10 at 119 (2001). We now hold that the comparative negligence defense is unavailable to a professional insurance broker who asserts that the client failed to read the policy and failed to detect the broker's own negligence. It is the broker, not the insured, who is the expert and the client is entitled to rely on that professional's expertise in faithfully performing the very job he or she was hired to do.
In September 1994, Benjamin and Beatrice Aden purchased a $48,000 condominium in Sussex County. Prior to closing, Benjamin Aden (Aden), a retiree, contacted Robert Fortsh, an insurance broker, to request insurance coverage for the new condominium. Fortsh had been the Adens' broker since about 1979, selling them a variety of insurance policies, including auto insurance, life insurance, health insurance, and homeowners' insurance for their previous home. Although Aden and Fortsh agree that they spoke on two occasions regarding the new policy, the parties dispute the substance of those conversations.
Aden testified that he asked Fortsh for "a policy that would cover any losses I might have in my condo" and told Fortsh he wanted the equivalent of "a homeowners' policy which happened to be [for] a condo." Aden further testified that Fortsh asked him two questions regarding the policy during their first conversation in the beginning of August 1994: first, the amount Aden paid for the condominium, which Aden told him was $48,000; and, second, the worth of his personal contents in the condominium, which Aden estimated at $16,000.
Aden testified that in their second conversation Fortsh offered him a policy with an annual premium of $98. Aden stated that Fortsh neither explained what the policy covered nor advised Aden to verify that his condominium association insurance policy provided coverage for losses that the policy issued by Fortsh did not. Aden accepted the policy but testified that he did not read it when he received it.
Fortsh's description of events was markedly different. He testified that when Aden first contacted him about insuring the new condominium, Aden asked for the "minimum policy requirements." Fortsh also testified that he instructed Aden to contact his condominium association to discover what type of coverage the association provided because, in Fortsh's experience, some association policies cover damages to both the exterior of the condominium and the interior or "dwelling," obviating the need for unit owners to purchase dwelling coverage.
He then offered Aden a policy with a $120 annual premium from Prudential. According to Fortsh, Aden rejected that policy as too expensive after he consulted with his neighbors in the condominium development. Because of his longtime business relationship with the Adens, Fortsh testified that he tried to obtain a cheaper policy from a different insurer, the Hartford Insurance Company, through a different broker, Johl & Company. Fortsh noted that ordinarily he would not have made additional efforts because the initial quote of $120 was relatively inexpensive. Fortsh also indicated that he would have received a slightly higher commission if he provided a Prudential policy rather than a Hartford policy.
Nevertheless, Fortsh contacted Aden and offered him the Hartford policy with the $98 annual premium. Fortsh testified that he then read a computer printout containing the policy limits and again advised Aden to consult the condominium association policy to ensure that anything not covered under the Hartford policy would be covered under the association policy. Although the Hartford policy was less expensive than the initial Prudential policy offered to Aden, Fortsh testified that the coverage was the same.
There is no dispute that in September 1994, Aden sent Fortsh a check for $98 for the Hartford premium, as well as written authorization for Fortsh to apply for the policy on behalf of Aden. Fortsh completed the application for the Hartford policy and signed it with Aden's permission. Aden was not sent a copy of the application. The policy issued to the Adens provided $1,000 in coverage in the event of damages to their dwelling.
On cross-examination, Fortsh conceded that he did not verbally review with Aden the specific amount of dwelling coverage. Rather, Fortsh testified that when he returned the application for the Hartford policy, he left the box for dwelling coverage blank. The record is unclear with respect to how the amount of dwelling coverage became $1,000 under the policy since Fortsh left that portion of the application blank and the application itself is not included in the parties' appendices. In any event, Fortsh's deposition testimony, read to the jury during trial, indicated that he believed that dwelling coverage under the Hartford policy would be unnecessary because there should have been adequate coverage through Aden's condominium association policy. Fortsh testified that he himself never reviewed the condominium association policy to verify that belief. Fortsh also testified that he "assumed" that Aden read his association policy. The policy was renewed after a year.
In June 1996, a fire damaged the Adens' condominium. The damage caused to the exterior of the building was covered by the insurance provided under the condominium association policy. Nevertheless, Aden paid about $20,000 in repairs for damage to the interior of the building because, as noted, the Hartford policy provided for only $1,000 in dwelling coverage. Aden testified that he discovered the limited amount of coverage after the fire occurred, when he read his policy for the first time.
In October 1996, the Adens filed a complaint in the Law Division against Fortsh and Johl & Company for negligently failing to procure adequate insurance on the condominium. Prior to trial, the Adens settled with Johl & Company.
A two-day trial commenced in August 1998. In addition to the testimony of Aden and Fortsh, the jury heard from two expert witnesses. Plaintiffs' expert, Debra Stanton, an insurance agent, testified that the generally-accepted procedure by which an insurance broker procures a condominium insurance policy for a client is to review the insured's condominium association policy beforehand to determine what "the condominium association is agreeing to cover versus what they're making the unit owner responsible to cover." To that end, according to Stanton, a broker either should ask the client to obtain a copy of the condominium's master deed, or should directly contact the association to obtain the master deed which would indicate the coverage contained in the association policy.
Stanton testified that many, if not the majority of association policies will provide coverage for the exterior of the condominium but not the dwelling. If a copy of the association policy was not readily available, Stanton testified that her company would require the insured to purchase at least $10,000 worth of coverage. Because Fortsh did not review the Adens' master deed before procuring the policy, it was Stanton's opinion that he did not act in conformance with industry standards.
Defendant's expert, Armando Castellini, a licensed broker, testified that Fortsh acted in conformance with industry standards. Castellini testified that by advising Aden to review the master deed to find out whether there were any further insurance requirements, as Fortsh claimed to have done, Fortsh did what was expected of him. Furthermore, Castellini stated that it was not a prerequisite for a broker such as Fortsh to review the Adens' master deed prior to securing coverage for them. Had Fortsh failed to advise Aden to review the master deed, Castellini conceded that Fortsh would not have met industry standards. Conversely, if Fortsh attempted to review the master deed, Castellini claimed that would have been an inappropriate "attempt to interpret legal documents." Castellini also testified that if the dwelling coverage limits of the Adens' policy were increased to $48,000, the annual premium would have risen to $296 per year.
At the conclusion of the trial, the court charged the jury in part that the law imposes on the insurance broker the duty or obligation to have and to use that degree of skill and knowledge which insurance brokers of ordinary ability and skill possess and exercise in the representation of a client, such as the plaintiff Aden in this case. This is the standard by which to judge the defendant Fortsh in his placement and advice as to the insurance on this dwelling, condominium dwelling unit.
To find proximate cause it is not necessary that the negligence of the defendant Fortsh be the sole cause of the plaintiff Aden's harm. The law recognizes that in the case of insurance malpractice, there may be any number of factors that led to the plaintiff's harm. However, in order for the defendant Fortsh's conduct to be considered a proximate cause of the plaintiff Aden's harm, the negligence of the defendant Fortsh must have been a substantial factor in bringing about that harm or loss.
Now, defendant has offered testimony that the plaintiff Aden's own actions or inactions were the sole proximate cause of having virtually no interior structural and fixture insurance coverage for the fire damage to his condominium. If you find that defendant has proven by a preponderance of evidence that plaintiff was the sole proximate cause of this lack of insurance coverage, you will find in favor of defendant and dismiss plaintiff's case.
On the other hand, if you find that the plaintiff has proven by a preponderance of evidence the negligence of the defendant in providing inadequate and incomplete advice and procurement of insurance coverage, and that that was a substantial factor in bringing about the losses that occurred, and that some harm to the plaintiff was foreseeable from the defendant Fortsh's negligence, then you will find in favor of plaintiff.
Defense counsel had requested the court to charge the jury that "an insured is chargeable with knowledge of the contents of a policy" and that "an insured is chargeable with knowledge of the contents of a policy in the absence of fraud or inequitable conduct on the part of the insurer." The court, however, declined to accept that recommended charge. We accept, for purposes of this appeal, defense counsel's assertion that the recommended charge represented a request for an instruction in respect of comparative negligence.
During deliberations, the jury requested clarification on the meaning of proximate cause. In response, the court read back that portion of its instructions. The jury ultimately returned a unanimous 7-0 verdict in favor of the Adens. The parties had stipulated damages in the amount of $18,566. After calculating pre-judgment interest, the trial court entered judgment in the amount of $20,877. The Appellate Division reversed, holding that the trial court erred in refusing to instruct the jury with respect to Aden's failure to read the policy. This Court granted certification. 164 N.J. 561 (2000). We now reverse the judgment of the Appellate Division and reinstate the verdict.
Our Legislature abolished contributory negligence in favor of the doctrine of comparative fault by adopting the Comparative Negligence Act, L. 1973, c. 146. Section two of the Act currently states that in all negligence actions jurors are responsible for determining "[t]he extent, in the form of a percentage, of each party's negligence or fault." N.J.S.A. 2A:15-5.2. The Act applies to strict liability and negligence actions, including "civil actions for damages based upon theories of negligence, products liability, [and] professional malpractice whether couched in terms of contract or tort and like theories." Ibid. However, unlike the comparative negligence statutes of other states, our Legislature decided against requiring jurors, and only jurors, to resolve allegations of the plaintiff's negligence. Vega ex rel. Muniz v. Piedilato, 154 N.J. 496, ...