The New Jersey Supreme Court today released a decision that has to do with auto insurance coverage that car dealerships use.
At the center of Tyrone A. Huggins v. Mary E. Aquilar is whether the provision in an automobile dealer’s insurance policy, which provides coverage in the minimum amount required by law only if the driver of the vehicle has no other coverage or if the driver has coverage in an amount less than the statutory minimum, a permissible step-down provision or an unlawful escape clause.
A unanimous court held the disputed coverage provision in the garage policy at issue constitutes an illegal escape clause, which may not be used to evade the minimum liability requirements for dealership vehicles set by the Chief Administrator of the Motor Vehicle Commission (MVC). The Court orders the reformation of Federal’s policy to the $100,000/$250,000 dealer-licensure minimum liability coverage required by N.J.A.C. 13:21-15.2(l).
“We now hold that the disputed coverage provision in the garage policy at issue constitutes an illegal escape clause, which may not be used to evade the minimum liability requirements for dealership vehicles set by the Chief Administrator of the MVC. For reasons expressed herein, we affirm the 4 judgment of the trial court with modification as to the amount of compulsory coverage required in these circumstances,” the decision states.
Read the full decision, written by Justice Jaynee LaVecchia, here.