June 6, 2005; Opinion Withdrawn and new opinion filed June 10, 2005
On certification to the Superior Court, Appellate Division, whose opinion is reported at 368 N.J. Super. 311 (2004).
(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).
This case involves the adequacy of notice given by Prudential Insurance Company (Prudential) to its insured of an amendment to the uninsured/underinsured motorists coverage provisions of an automobile insurance policy. The circumstances giving rise to this issue follow.
On June 5, 2000, Shedrack Skeete, a passenger in a car driven by Queenie Thomas, was injured when the car was struck by a vehicle driven by Chaisner Dorvius. Skeete instituted a personal injury suit against Dorvius. The jury rendered a verdict in favor of Skeete but Dorvius' insurance policy was limited to $25,000/$50,000, an amount insufficient to cover Skeete's injuries.
Skeete also brought an underinsured motorist (UIM) claim against Prudential, Thomas's insurer. Thomas had purchased her policy in 1997, electing UM/UIM coverage of $100,000/$300,000. In 1999, Prudential changed the policy. Among the changes was the characterization of parties in Skeete's position as "Additional Insureds." Under the new policy, additional insureds were entitled to only a $15,000/$30,000 limit. On May 25, 1999, Thomas received notice of the changes in the form of two packages of material from Prudential. Together, the materials comprised 113 pages and included a cover letter advising the insured to read the notices of change and a three page notice outlining the changes. The declarations page of the new policy set forth coverage, limits and premiums that did not reflect the step down in coverage for additional insureds. On June 9, 1999, Prudential sent Thomas another package of 78 pages re-rating her policy. The amended declaration page again listed the coverage for Uninsured Motorists as $100,000 for each person and $300,000 for each accident with no notation about the step down in coverage.
The trial court granted Prudential's motion for summary judgment on the UIM coverage issue. In a reported opinion, the Appellate Division reversed, holding that the carrier's notice of changes in its coverage was inadequate. This Court granted Prudential's petition for certification.
HELD: Substantially for the reasons expressed by the Appellate Division,the notice of the addition of the step-down was insufficient because of its presentation as part of an essentially undifferentiated passel of two hundred documents. Policy changes must be conveyed fairly.
1. It is the placement of the notice and not its specificity that is the issue. Had the insurer sent the cover letter with the three-page notice outlining the changes separately, thus giving the insured a chance to digest the changes before drowning her in a sea of paper, the outcome might well have been different. Policy changes must be conveyed fairly, although in no particular form. In this case, the insurer fell short. (pp. 6-7)
Judgment of the Appellate Division is AFFIRMED.
JUSTICE ALBIN filed a separate concurring opinion, in which JUSTICE ZAZZALI joins, stating that nothing in the language of Thomas' declaration page would have suggested to the average insured that a passenger in her car would be subject to a coverage limit of $15,000 and that Thomas was entitled to benefit from the reasonable expectations raised by the declaration page, notwithstanding the contradictory language in the policy.
JUSTICE LaVECCHIA filed a separate dissenting opinion in which CHIEF JUSTICE PORITZ and JUSTICE RIVERA-SOTO join, and would reverse the Appellate Division judgment; the insured received, with her policy and in addition to the declarations pages, a cover letter that specifically drew her attention to a concise, understandable three-page notice in which the UM/UIM limitation was explained.
JUSTICE WALLACE joins in JUSTICE LONGS opinion. JUSTICE ALBIN filed a separate concurring opinion, in which JUSTICE ZAZZALI joins. JUSTICE LaVECCHIA filed a separate dissenting opinion in which CHIEF JUSTICE PORITZ and JUSTICE RIVERA-SOTO join.
The opinion of the court was delivered by: Justice Long
The facts in this case are detailed in the decision of the Appellate Division, Skeete v. Dorvius, 368 N.J. Super. 311 (App. Div. 2004). We repeat only those that are necessary to our disposition. On June 5, 2000, Shedrack Skeete was injured when a car, owned and driven by Queenie Thomas, in which he was a passenger, was struck by a vehicle owned and operated by Chaisner Dorvius. Skeete, who had no automobile or auto policy of his own, and was not a member of a household with insurance coverage, sued Dorvius whose policy was insufficient to cover his injuries. He also sought Underinsured Motorist (UIM)coverage under Thomas's Prudential policy on which he was an "insured" by virtue of occupying Thomas's covered vehicle.
Thomas had purchased that policy in 1997, electing UM/UIM coverage of $100,000/$300,000. She was the "named insured" on the policy, the UM/UIM provision of which identified her, any relative living in her household and "anyone occupying a car covered under this part" as an "insured." That policy did not contain a step-down clause. Thus any "insured" presumably would have been entitled to the stated UM/UIM limits of $l00,000/300,000.
In 1999, Prudential changed the policy, in part, as a result of the Auto Insurance Cost Reduction Act of 1998 (AICRA) N.J.S.A. 39:6A-1.1. Among the changes was the characterization of parties in Skeete's position as "Additional Insureds." Under the new provision, the named insured*fn1 was entitled to the $100/300,000 limit but Additional Insureds were entitled to only a $15,000/30,000 limit. The new policy stated:
Additional Insureds as described in this part are also covered, but only up to a limit of $15,000 per person/$30,000 per occurrence. Coverage is subject to the Uninsured and Underinsured Motor Vehicle definitions.
Limit of Coverage-Bodily Injury: Each Person
The amount shown on the declarations page under Uninsured Motorists Bodily Injury - Each Person is the maximum limit of liability for all damages, including damages for care or loss of services, arising out of Bodily Injury to one Insured injured as a result of any one accident. However, if you are an Additional Insured as defined under this part, the maximum liability for Each Person is $15,000.
The Appellate Division described in detail how Thomas was notified of the changes in the policy. Skeete, supra, 368 N.J. Super. at 314-17. In brief, on May 25, 1999, Thomas received two packages of material from Prudential. The first was an 83 page document reflecting the AICRA changes. The second contained another thirty pages.
Together the 113 pages in the two May 25 packages included a cover letter advising the insured to read the notices of change and a three page notice outlining the changes. Also included were a New Standard Auto Policy Booklet Parts 1, 2, 3, 4, a separate Part 5, a renewal declarations page, a bill, insurance identification cards, Notice of Policy Changes, PIP Pre-Certification Requirements, Endorsements PAC 4220 and PAC 236 and PCD 3523 standard coverage selection forms, a Buyer's Guide, and a Rating Information Form.
The declarations page of the new policy, included in the 83 page package, stated coverage, limits and premiums that did not reflect the step down:
Uninsured Motorists-Bodily Injury