finding that an ambiguity arises “where the phrasing of the policy is so confusing that the average policyholder cannot make out the boundaries of coverage” and in which case “courts interpret the contract to comport with the reasonable expectations of the insured” (citations omitted)
How later courts described this case
- finding that an ambiguity arises “where the phrasing of the policy is so confusing that the average policyholder cannot make out the boundaries of coverage” and in which case “courts interpret the contract to comport with the reasonable expectations of the insured” (citations omitted)
- rejecting “reasonable expectations” argument because the policy language was “not so confusing that the average policyholder cannot make out the boundaries of the coverage,” nor was an “entangled and professional interpretation of an insurance underwriter . . . pitted against that of an average purchaser of insurance” (internal quotation marks and citation omitted)
- explaining that “an insurance contract is not per se ambiguous because its declaration sheet, definition section, and exclusion provisions are separately presented”
- noting that New Jersey courts will even “depart from the literal text and interpret it in accord[] with the insured’s understanding” if the insurance contract “cannot be understood without employing subtle or legalistic distinctions”
Written by the judges who cited it.
The opinion
LONG, J.,
dissenting.
I do not subscribe to the judgment of my colleagues in this rather straightforward case. Their conclusion that the boat liability policy purchased by Zacarías is not ambiguous is footed on a *605 Herculean effort by an insured. The scope of that effort was set forth precisely by Judge Pressler who dissented below:
To begin with, the declarations page of this policy identifies only plaintiff-husband, Joao Zacarías. Nor is he even refereed to as the “named insured,” a designation which, to a careful reader of the declarations page, might suggest some limitation or qualification to come. Certainly the declarations page in no way itself suggests that anyone else is an insured. This is, as we have pointed out, both a casualty and a liability policy. The terms of the liability coverage appears on page ten, which one could locate there either by consulting the table of contents on page one of the policy or by simply flipping through the policy. The section begins with the heading “Losses We Cover.” Those losses are defined as
all sums arising from an accidental loss which an insured person becomes legally obligated to pay as damages because of bodily injury or property damage resulting from the ownership, maintenance, or use of covered water craft, boat equipment or boat trailers.
There is, of course, nothing in this definition to suggest that there is any insured person other than the person identified on the declarations page. Thus the sole person who is named on the declarations page could safely assume that if he became legally obligated to pay damages to a family member because of his negligence, he would be covered therefor.
Then comes the second portion of the liability coverage entitled “Losses We Do not Cover.” In addition to the usual exclusions for intentional or criminal conduct of an insured person, illegal or business use of the boat, workers’ compensation claims, and the like, is paragraph 2, which provides in full that:
We do not cover bodily injury to an insured person or property damage to property owned by an insured person.
There is still nothing to suggest to the reader of the liability coverage that there is any insured person subject to this exclusion other than the insured named in the declarations page.
In order for the reader of the policy to determine who is intended by the insurer to be embraced within the phrase “insured person” for purposes of the liability exclusion, he must refer to paragraph 3 of the definition section appearing on page three of the policy and to which nothing in the liability coverage sections on page ten directs him. And even though the text of the liability exclusion clause does not use the pronoun “you” or “your,” he would nevertheless have to perceive the relevance and significance of the page three, paragraph 1 definition of “you” or “your” as including the resident spouse of the insured named on the declarations page. Then, if he properly completes this unmapped exercise in contract construction and if does so at the time the policy is delivered to him — both of which eventualities I regard as remote in the case of the average buyer of insurance — he may come to understand that even though he is exclusively identified on the declarations page and thus appears to be the only insured, an “insured person” also includes “any relative” and “any dependent person in your care” if “resident in your household.” And then, if he is quick witted or experienced in such matters, he may finally indeed come to realize that the “insured person” whose liability *606 claims are excluded from coverage on page ten are the members of his family with whom he lives and who are free, as a matter of law, to sue him for negligence and to obtain damages for personal injury from him.
[Zacarias v. Allstate Ins. Co., 330 N.J.Super. 231, 238-240 , 749 A.2d 394 (App.Div.2000)(Pressler, P.J.A.D., dissenting).]
The burden of deciphering this policy renders it ambiguous, thus justifying resort to the “reasonable expectations” doctrine that, in the face of ambiguity, requires us to honor the objectively reasonable expectations of insurance applicants even where a “ ‘painstaking study of the policy provisions would have negated those expectations.’ ” Sparks v. St. Paul Ins. Co., 100 N.J. 325, 338-39 , 495 A.2d 406 (1985)(quoting R. Keeton, Insurance Law 351 (1971); R. Keeton, Insurance Law Rights at Variance with Policy Provisions, 83 Harv. L.Rev. 961, 967 (1970)). Applied here, the reasonable expectations doctrine requires a ruling in favor of Zacarías who, like any purchaser of a boat liability policy, reasonably expected to be covered for all legally cognizable liability claims against him arising out of the use of the boat — including legally recognized interspousal claims. See Merenoff v. Merenoff, 76 N.J. 535, 557 , 388 A.2d 951 (1978) (holding that doctrine of interspousal tort immunity is abrogated as bar to civil suit between married persons for damages for personal injuries). See also Foldi v. Jeffries, 93 N.J. 533, 549 , 461 A.2d 1145 (1983) (concluding that doctrine of parental immunity will no longer insulate parent from liability for willful or wanton failure to supervise children). Indeed, in purchasing $500,000 worth of boat liability insurance, what reasonable person would not expect coverage for injuries sustained by his family members, the people most likely to be on the boat?
That belief, in addition to being objectively reasonable standing alone, has particular resonance in light of the equally reasonable conclusion by an insurance applicant that, generally, boat liability insurance is an analogue to auto insurance, except for the means of conveyance. To be sure, we have distinguished auto from other forms of insurance from a public policy perspective because auto insurance is compulsory. Horesh v. State Farm Fire & Cas. Co., *607 265 N.J.Super. 32, 37 , 625 A.2d 541 (App.Div.1993). Nevertheless, and despite that legal distinction, there is nothing about a boat liability policy to alert an insurance applicant that he is not purchasing coverage similar to that purchased for an automobile.
Although I am delighted that the majority has acknowledged the viability of Lehrhoff v. Aetna Cas. and Sur. Co., 271 N.J.Super. 340 , 638 A.2d 889 (App.Div.1994), one need only return to the language of Lehrhoff to divine the fallacy of the conclusion that the declarations page in this case passes muster.
There has been little judicial consideration of the import of the declaration page of an insurance policy in terms of the construction of the policy as a whole and in terms of its capacity to define the insured’s reasonable expectations of coverage. We, however, regard the declaration page as having signal importance in these respects. A personal automobile insurance policy is a bulky document, arcane and abstruse in the extreme to the uninitiated, unversed and, therefore, typical policyholder. We are persuaded, therefore, that a conscientious policyholder, upon receiving the policy, would likely examine the declaration page to assure himself that the coverages and their amounts, the identity of the insured vehicle, and the other basic information appearing thereon are accurate and in accord with his understandings of what he is purchasing. We deem it unlikely that once having done so, the average automobile policyholder would then undertake to attempt to analyze the entire policy in order to penetrate its layers of cross-referenced, qualified, and requalified meanings. Nor do we deem it likely that the average policyholder could successfully chart his own way through the shoals and reefs of exclusions, exceptions to exclusions, conditions and limitations, and all the rest of the qualifying fine print, whether or not in so-called plain language. We are, therefore, convinced that it is the declaration page, the one page of the policy tailored to the particular- insured and not merely boilerplate, which must be deemed to define coverage and the insured’s expectation of coverage. And we are also convinced that reasonable expectations of coverage raised by the declaration page cannot be contradicted by the policy’s boilerplate unless the declaration page itself clearly so warns the insured.
[ Lehrhoff, supra, 271 N.J.Super. at 346-47 , 638 A.2d 889 .]
In light of Lehrhoff , at the very least, the declarations page in Zacarias’s boat liability policy should have alerted him that the policy contained an intra-family exclusion, eliminating from liability coverage the persons most likely to be on the boat. In other words, he should have been put on notice that his family members, whose interests were a good part of the reason he purchased the policy, could not invoke its protection. For those reasons and for *608 the reasons expressed in Judge Pressler’s opinion, I respectfully dissent.
Justice ZAZZALI joins in this opinion.
For affirmance — Chief Justice PORITZ and Justices STEIN, YERNIERO and LaVECCHIA — 4.
For reversal — Justices LONG and ZAZZALI — 2.