On appeal from the Superior Court of New Jersey, Law Division, Mercer County, Docket Nos. L-2283-04 and L-2804-04.
The opinion of the court was delivered by: Cuff, P.J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Cuff, Winkelstein and Fuentes.
In these consolidated insurance coverage appeals, we encounter the "step-down" clause in a different context than recent cases. Here, rather than a policy provision that provides two levels of coverage, as in certain underinsured and uninsured motorist situations, we address a provision that provides minimum coverage in place of a former exclusion. We hold that an amendment to a personal automobile policy that provided for a step down of coverage rather than an exclusion of coverage when the covered automobile was driven by a person in the automobile repair business is valid and enforceable. Therefore, we affirm the order granting summary judgment in favor of defendant High Point Insurance Company (High Point).*fn2
On June 23, 2003, plaintiffs Theresa Seabridge and Mildred Sessa were involved in an automobile accident with an automobile owned by defendant Nicholas A. Rossos and operated by defendant Sean F. Petry, an employee of defendant Discount Auto, Inc. (Discount). Rossos's vehicle was in the possession of Discount for service at the time of the accident. On that date, Rossos was insured under a personal automobile policy issued by defendant High Point.
The policy in effect at the time of the accident provided coverage of $100,000 per person and $300,000 per accident. The policy also contained the following provision for persons who drove an insured's automobile while engaging in the automobile business:
We will pay, on behalf of persons insured under this part, all sums they become legally obligated to pay as damages because of an automobile accident which results in bodily injury to someone else, or which results in property damage to someone else, except as shown under Losses We Will Not Pay For (Part 2). These payments will be subject to the amount of coverage shown on the Declarations.
The High Point policy specifically addressed losses that it would not pay and losses that it would pay at a level less than the policy limits. As to "automobile business" use, the policy provided: "We will not pay more than a coverage limit of $15,000 per person, $30,000 per accident for injury or damage caused by any person while such person is employed or otherwise engaged in any automobile business." The policy defined "automobile business" as "the occupation or business of selling, repairing, servicing, storing, parking or transporting vehicles or motor vehicles." The policyholder had no notice of this change.
Prior to January 2003, the policy excluded coverage for losses that occurred for injury or damage caused by any person engaged in the automobile business. Thus, under the policies issued to Rossos prior to January 2003, the High Point policy would have provided no coverage for the damage and injury caused by Discount's employee to plaintiffs.
In response to cross-motions for summary judgment, Judge Jacobson determined that a reasonable insured would have considered the amendment to the Rossos policy an increase in coverage and would not necessarily have expected specific notice of the change. Moreover, the amendment was not obscured by "an undifferentiated passel of 200 documents." Thus, she distinguished Skeete v. Dorvius, 184 N.J. 5 (2005), ...