On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket No. L-2570-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Sabatino and J. N. Harris.
This matter involves the application of a coverage limitation within an insurance policy for a commercial vehicle. The vehicle in question is a 1995 Freightliner truck, which, at the relevant time, was owned by and registered to Marek Orzechowski ("Marek"), a resident of Linden.
In February 2002, Marek procured a one-year commercial vehicle policy with defendant, National Independent Truckers Insurance Company ("National"). The policy furnished liability coverage for damages that the "insured" would be obligated to pay for bodily injury or property damage, where caused by an accident within the scope of the policy and "resulting from the ownership, maintenance or use" of the covered vehicle. The policy defines an "insured" to include not only the vehicle's owner but also persons using the vehicle with the owner's permission.
The National policy established a coverage limit of $500,000. However, that $500,000 in coverage was qualified by additional language in a related endorsement, signed by Marek and dated February 6, 2002, pertaining to so-called "unreported drivers." The substantive portion of that endorsement reads as follows:
A. ADDITIONAL DEFINITIONS
As used in this endorsement and policy: "Unreported Driver" means any person using a covered auto who has not been reported by you to us and whose name does not appear on the original or amended Declarations of this policy at the time of such loss.
B. OBLIGATION TO REIMBURSE
In the event of an accident caused by the operation of a covered auto by an unreported driver to which this insurance applies, you will be liable and obligated to reimburse us up to the first $10,000 of any sums that we pay as damages because of "bodily injury", "property damage" or "covered pollution cost or expense".
C. LIMIT OF INSURANCE COVERAGE
The limit of insurance with respect to any accident involving an unreported driver to which this insurance applies shall be the lower of (1) the Limit of Insurance shown in the Declarations or (2) the minimum liability insurance coverage required under the Motor Vehicle Financial Responsibility Laws of the State or federal regulatory agency having jurisdiction over the issuance of this policy. [(Emphasis added).]
The appellant in this case, plaintiff Glenn Ford, has characterized this endorsement as a "step-down" clause, because its intended effect is to reduce the available coverage for accidents caused by such unreported drivers who use the truck with the owner's permission. The provision, where applicable, takes the coverage down from the $500,000 policy limit to a lower sum ...