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In seeking to limit the amount of coverage in this auto accident case, the insurer relied on a policy limitation/exclusion that was seemingly unambiguous. The trial court, however, found applying this exclusion would violate the insured’s reasonable expectations. Thus, despite this unambiguous policy language, the trial court granted the insured summary judgment providing full coverage as if the exclusion did not exist. The Appellate Division affirmed.

The trial court, however, did reject the insured’s bad faith, punitive damage, and Consumer Fraud Act claims, despite ruling in the insured’s favor on the scope of coverage. The Appellate Division similarly affirmed on these issues. It adopted the trial court’s reasoning, described as follows:

Turning to plaintiff’s causes of action, the [trial] judge rejected plaintiff’s claims of bad faith, consumer fraud and punitive damages as unsupported in either the facts or the law. She found plaintiff had failed to proffer any evidence of bad faith on [the insurer’s] part, including the withdrawal of its settlement offer based on the intra-family step-down [exclusion] in plaintiff’s policy. The judge rejected plaintiff’s consumer fraud claim, finding the carrier’s refusal to pay a disputed policy benefit was not an unconscionable commercial practice. See Myska v. N.J. Mfrs. Ins. Co., 440 N.J. Super. 458, 485 (App. Div. 2015) (noting that while the Consumer Fraud Act applies to the sale of insurance policies, “it was not intended as a vehicle to recover damages for an insurance company’s refusal to pay benefits”). Finally, the judge found plaintiff had not shown that any of [the insurer’s] acts was actuated by actual malice or accompanied by “a wanton and willful disregard” of her rights. See N.J.S.A. 2A:15-5.12(a).

Date of Decision: May 6, 2022

Dela Vega v. The Travelers Insurance Company, Superior Court of New Jersey Appellate Division No. A-2272-19, 2022 WL 1436461 (N.J. Super. Ct. App. Div. May 6, 2022) (Accurso, Enright, Vernoia, JJ.)