On appeal from the Superior Court of New Jersey, Law Division, Atlantic County, Docket No. L-2180-08.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Sapp-Peterson and Ostrer.
This appeal involves a taxi insurance policy that excluded coverage for unnamed and unapproved drivers. The parties conceded before the trial court that the policy's complete exclusion of coverage was unenforceable. The issue on appeal is whether liability coverage for unnamed drivers should be limited to the statutory minimums, or should extend to the policy limits. We conclude that reforming the policy terms to provide the statutory minimum coverage harmonizes the public policy favoring reparations for third parties victims, the contractual agreement of the insurer and insured, and the public interest in encouraging scrutiny of insured drivers of taxicabs. We reverse and remand.
On July 26, 2006, Raymond Norwood was driving a taxicab owned by Darline Desamours (Desamours) when he was involved in an accident resulting in injury to plaintiff Carol Alvarez. Norwood had been driving Desamours's taxicab for about two years, logging about twelve hours a day. Under his oral arrangement with Desamours, Norwood retained fifty percent of the fares he collected after deducting fuel costs. Desamours received the balance of the fares. Aside from supplying the vehicle, she was responsible for insurance, maintenance, and dispatch service. Norwood considered Desamours his employer. It is unclear from the record whether Desamours considered Norwood an employee for tax purposes or in connection with workers compensation law.*fn1
Roughly eight months before the accident, on December 24, 2005, Desamours had obtained a new one-year commercial auto insurance policy for her taxi from Pinelands Insurance Co. (Pinelands), a risk retention group that wrote insurance exclusively for taxis. The policy provided $100,000 in liability coverage, with no deductible, for a $5,728 annual premium.
In an underwriting data form that Desamours signed, she agreed that "NO DRIVER will be afforded coverage that has not been approved[.]" Approval of the application was contingent upon her providing a "Drivers List including approved MVR's [motor vehicle records] for each driver." The schedule of drivers included Jean Desamours*fn2 and Jean Dupont, but not Norwood. Consequently, Pinelands obtained MVRs for Jean Desamours and Dupont, but not Norwood.
The insurance policy included an omnibus clause that generally extended coverage to anyone using the vehicle with the named insured's permission. The clause defined "insureds" to include: the named insured, who was Desamours; "[a]nyone else while using with your permission a covered 'auto' you own, hire or borrow[;]" and "[a]nyone liable for the conduct of an 'insured' described above but only to the extent of that liability."*fn3
However, the policy also included two endorsements, in some respects inconsistent, that excluded coverage when the auto was used by an unnamed driver. A "Scheduled Driver Endorsement" restricted coverage to named drivers, but deemed drivers added upon submission of requisite information. The Scheduled Driver Endorsement stated:
This Endorsement changes the Policy. Please read it carefully!
No Coverage shall be provided under this Policy for any covered auto, which is being used or operated by anyone other than the driver(s) or operator(s) named below.
New Drivers and operators shall be deemed to be added to this Scheduled Driver Endorsement provided the insured reports in writing the driver's name, date of birth, and driver's license number to the insurer within two days from the effective date of use of the auto, or provides the insurer with a current Motor Vehicle Record for each driver or operator to be insured.
Under a heading "Named Driver or Operator Listing" two drivers were listed: Jean Desamours and Jean Dupont. Just before the line where Desamours placed her signature, the endorsement stated, "Special note: All Other Drivers excluded."
The policy also included a "Named Driver(s) Exclusion Endorsement," which predicated coverage not simply upon submission of the names and information of drivers, but the insurer's approval of the driver. The Named Driver(s) Exclusion Endorsement provided: "THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY" and "This endorsement modifies ...