If you like many other insurance policy consumers renew your policy on a yearly basis with the same insurer assuming your coverage limits remain constant — what is the insurer’s notification obligation when a newly added policy provision alters your coverage limits?
Our Supreme Court has held that policy changes must be conveyed fairly to the policyholder, although in no particular form. Skeete v. Dorvius, 184 NJ 5 (2005). Thus if a policy change altering your coverage amount is buried within a few paragraphs of a 100 page insurance policy this is insufficient. Placement of Notice of a Policy Change is critical and for the new policy language to be enforced the insurer should notify its insured in a cover letter outlining significant policy changes for the upcoming year so that the policyholder is aware of them. Such a practice gives the policyholder “a chance to digest the changes before drowning …in a sea of paper.” Skeete, 184 NJ at 9. For example in Newman v. Insurance. Co., 2009 WL 2243779 (App. Div. 2009), Newman was driving a truck owned by his employer when he was struck and seriously injured by an uninsured driver. Newman had three possible policies under which to assert his uninsured motorist claim: the employer’s Insurance policy, his own insurance policy which had uninsured limits of $15,000 and because he was a resident of his parents’ their NJM policy which had $300,000 limits. The NJM policy had a step down uninsured motorist provision which stated that NJM’s limits would not exceed the highest applicable limit of liability under any insurance providing coverage to Newman. NJM took the position that its liability was limited to the $15,000 maximum amount Newman elected under his own automobile policy for uninsured coverage not the $300,000 limit chosen by his parents. While the court acknowledged that the step – down provisions are enforceable Newman’s parents were not provided with adequate notice of the step – down clause and NJM “should have informed Newman’s parents when the step – down clause was added, that the coverage for any insured who was not a named insured (Newman) would be greatly limited.” 2009 WL 2243779 at p. 5. Consequently the court found that NJM’s limits applied and Newman was not limited to a $15,000 recovery for his significant injuries.
If your understanding of the scope of coverage purchased by you differs from the insurers after notice of your claim is provided to the company, we can help you navigate through the issues and advise as to the merits of your claim based on policy language and case law.