Submitted November 27, 2018
appeal from Superior Court of New Jersey, Law Division,
Morris County, Docket No. L-2766-16.
Rudolph & Kayal, PA, attorneys for appellant (Darren C.
Kayal, on the briefs).
Forte, Fried, Zerres & Molinari, PC, attorneys for
respondent Robert Katchen (David M. Fried, on the brief).
& Vaughan, attorneys for respondent Rider Insurance
Company (William E. Vaughan, on the brief).
A. Klayman, PC, attorneys for respondent Farmers Insurance
Company of Flemington (Murray A. Klayman, on the brief).
Judges Fisher, Hoffman and Suter.
appeal, we consider whether an auto insurer may combine
uninsured (UM) and underinsured motorist (UIM) coverage in a
single section and include exclusions not listed on the
policy's declaration page. We also consider if an insurer
may exclude UIM coverage for an accident involving a vehicle
owned by the insured but not covered under the subject
policy. Because we find the exclusion does not violate public
policy or result in ambiguity, we reverse.
December 2015, plaintiff suffered injuries in a motor vehicle
accident while operating his Harley Davidson motorcycle.
Prior to settling with the other driver for his policy limit
of $25, 000, plaintiff submitted a UIM claim under three
insurance policies he maintained: a motorcycle policy issued
by defendant Rider Insurance Company (Rider), a commercial
auto policy issued by defendant Farmers Insurance Company of
Flemington (Farmers), and a personal auto policy issued by
defendant Government Employees Insurance Company
response, GEICO "disclaim[ed] coverage" based on an
exclusion in its policy. In its disclaimer letter, GEICO
identified the relevant policy language supporting its
IV of GEICO's policy, which addresses both UM and UIM
coverages, provides, in relevant part:
LOSSES WE PAY
We will pay damages for bodily injury and
property damage caused by an accident which the
insured is legally entitled to recover from the owner or
operator of an uninsured motor vehicle or
underinsured motor vehicle arising out of the
ownership, maintenance[, ] or use of that vehicle.
Section IV excludes coverage for "bodily injury
sustained by an insured while occupying a motor
vehicle owned by an insured and not described in the
[d]eclarations and not covered by the Bodily Injury and
Property Damage liability coverages of this policy."
Because the motorcycle, although owned by plaintiff, was not
listed on the policy it issued, GEICO determined it did not
constitute an "owned auto," which the policy
defined as a "vehicle described in this policy for which
a premium charge is shown for these coverages." Based
upon this determination, GEICO denied plaintiff's claim.
receiving GEICO's disclaimer, plaintiff filed a complaint
against all three defendant insurance carriers, seeking a
declaratory judgment that the UIM coverage of all three
carriers applied to the subject accident. GEICO then filed a
motion for a declaratory judgment, urging the court to find
its owned-motor-vehicle exclusion "valid, unambiguous,
and enforceable." The motion court denied GEICO's
motion, viewing the language of GEICO's policy as
ambiguous, and holding that GEICO failed "to comply with
the statutory requirements [of] N.J.S.A. 17:28-1.1."
parties thereafter came to an agreement that Rider and
Farmers would pay their pro-rata share of the $975, 000 in
UIM coverage owed to plaintiff, and GEICO would take this
appeal; if GEICO does not prevail, it would pay its
pro-rata share as well. Plaintiff,
Rider, and Farmers (respondents) all oppose GEICO's
appeal and urge us to affirm.
review the interpretation of a contract de novo.
Manalapan Realty, L.P. v. Twp. Comm. of Manalapan,
140 N.J. 366, 378 (1995); Sealed Air Corp. v. Royal
Indem. Co., 404 N.J.Super. 363, 375 (App. Div. 2008).
When an insurance contract's terms are clear and
unambiguous, we interpret the policy as written, using the
"plain, ordinary meaning" of the words used.
Zacarias v. Allstate Ins. Co., 168 N.J. 590, 595
(2001). But where an ambiguity arises, we interpret the
policy in favor of the insured and against the insurer.
President v. Jenkins, 180 N.J. 550, 562-63 (2004).
ambiguity exists when "the phrasing of the policy is so
confusing that the average policyholder cannot make out the
boundaries of coverage." Weedo v. Stone-E-Brick,
Inc., 81 N.J. 233, 247 (1979). We consider the entire
policy in determining if an ambiguity exists, but do not
"engage in a strained construction to support the
imposition of liability." Longobardi v. Chubb Ins.
Co. of N.J., 121 N.J. 530, 537 (1990). Insurance
policies are to be interpreted narrowly, but the provisions
within are presumed valid and effective if "specific,
plain, clear, prominent, and not contrary to public
policy." Princeton Ins. Co. v. Chunmuang, 151
N.J. 80, 95 (1997) (citing Doto v. Russo, 140 N.J.
544, 559 (1995)).
appeal, GEICO argues the motion judge incorrectly found the
subject policy ambiguous and in violation of N.J.S.A.
17:28-1.1. GEICO asserts its exclusion unambiguously bars UIM
coverage for a loss sustained by plaintiff while operating a