July 17, 2006 : Kenneth M. Portner Gains NJ Appellate Court Reversal in Insurance Coverage Dispute
In a significant ruling for insurers, the New Jersey Superior Court - Appellate Division has reversed a trial court's decision and has found that even where an insurance policy exclusion is nullified as contrary to statute, the face amount of the insurance policy is trumped by the amount of statutory minimum coverage. The issue was briefed and argued on behalf of Pennsylvania National Mutual Casualty Insurance Company by Weber Gallagher partner Kenneth M. Portner.
In the case, Apollo Flag Company claimed coverage as an additional insured under a commercial auto policy issued to Annin Flag, which provided liability limits of $500,000. The Penn National policy has an exclusion which would normally apply to a party such as Apollo, but under New Jersey law, the exclusion is unenforceable. Mr. Portner argued that while the exclusion may be unenforceable, it was only unenforceable to the extent that it purported to exclude coverage for the $15,000 statutory minimum coverage required under New Jersey law. This argument was based upon a December 2005 decision by the New Jersey Supreme Court involving a similar issue with a "business pursuits" exclusion.
The trial court disagreed that the Supreme Court case controlled, distinguishing it on a number of bases. However, Mr. Portner successfully argued to the Appellate Division that the recent Supreme Court decision governed resolution of the dispute in this case. Accordingly, the Appellate Division ruled that the insurer's indemnity obligations were limited to the $15,000 statutory minimum rather than the $500,000 limit listed on the policy.
A copy of the reported Appellate Division opinion in Potenzone v. Annin Flag Co., issued on July 17, 2006, can be viewed by clicking the link below.
File Under: Results, Insurance, Kenneth M. Portner