Court Opinion

ID: 9644299
Source: CourtListenerOpinion
Date Created: 2023-08-22 20:52:33.0476+00
Date Added: 2024-06-11T18:11:11.283060
License: Public Domain

O’HERN, J.,
dissenting.
The majority creates a paradox in this case. Even though an umbrella policy is anything but an automobile policy, the majority treats it as though it were. The majority adopted the reasoning of the Appellate Division in its unreported decision, “that there is no *161difference in the application of the permissive user rule under a primary or excess policy of automobile liability insurance. The rule of Matits v. Nationwide Mutual Insurance Company, 33 N.J. 488, 166 A.2d 345 (1960), and its progeny is equally applicable to an excess policy.”
This reasoning is understandable but unsound. To begin with, umbrella policies are a special form of excess coverage. “Umbrella policies serve an important function in the industry. In this day of uncommon, but possible, enormous verdicts, they pick up this exceptional hazard at a small premium. However, because of the misunderstanding of the courts as to the nature of such coverages, they have been held to fall within the definition of automobile liability insurance.” Mass v. U.S. Fidelity & Guar. Co., 222 Conn. 631, 610 A.2d 1185, 1190 (1992) (quoting 8C J. & J. Appleman, Insurance Law and Practice, § 5071.65 (1981)).
In Doto v. Russo, 140 N.J. 544, 659 A.2d 1371 (1995), the Court held that if an umbrella carrier held out to a policy holder that there would be underinsured motorist coverage under the policy, that representation would have to be met. In doing so, however, the Court clearly acknowledged that the purpose of umbrella coverage “is fundamentally different from a primary [automobile] liability policy.” 140 N.J. at 552, 659 A.2d 1371. The Court emphasized that
an “umbrella policy,” clearly intended as excess insurance to protect against catastrophic judgments and issued as supplementary insurance to existing primary policies themselves sufficient to meet the requirements of the law, is neither an automobile liability nor motor vehicle liability policy within the scope of the uninsured motorist statute, even though one of the primary policies may itself insure automobiles.
[Ibid, (citing Trinity Universal Ins. Co. v. Metzger, 360 So.2d 960, 962 (Ala. 1978)).]
“[A]ny other interpretation would distort the actual purpose of the umbrella policy.” Id. at 553, 659 A.2d 1371 (quoting Matarasso v. Continental Cas. Co., 82 A.D.2d 861, 440 N.Y.S.2d 40, 41 (App.Div. *1621981), aff'd, 56 N.Y.2d 264, 451 N.Y.S.2d 703, 436 N.E.2d 1305 (1982)).
Umbrella policies provide:
a needed form of coverage which picks up, above the limits of all other contracts, such as automobile and homeowners coverages, to give the security and peace of mind so necessary today where jury verdicts, or court awards, may be very substantial, to discharge the unexpected, but potentially bankrupting, judgment. The premium is comparatively small, for the size of the risk, so that the company cannot be expected to prorate with other excess coverages; and public policy should not demand that this be done.
[8A Appleman, supra, § 4906 at 348.]
That same reasoning should apply to coverage issues. Thus, while “an automobile policy must be construed, if possible, so as not to defeat a claim to indemnity,” 13 Appleman, supra, § 7483 at 573, that public policy does not extend with equal force to umbrella policies. In Motor Club Fire & Casualty Co. v. New Jersey Manufacturers Insurance Co., 73 N.J. 425, 375 A.2d 639, cert. denied, 434 U.S. 923, 98 S.Ct. 402, 54 L.Ed.2d 281 (1977), Judge Carton, when temporarily assigned, explained that in interpreting automobile insurance policies the Court had in Matits, supra, adopted “the broadest and most liberal approach, known as the ‘initial permission rule.’” 73 N.J. at 432, 375 A.2d 639. In interpreting the omnibus clauses of automobile liability insurance policies, they must be read “in light of the settled legislative policy designed to provide financial compensation to those who are wrongfully injured in motor vehicle accidents.” Id. at 433, 375 A.2d 639.1 That interpretation is plainly justified on the basis of the statutory directives that governed the language of automobile insurance policies. That provision, N.J.S.A 39:6-46(a) (repealed 1979), required that an automobile policy shall “insure the insured named therein and any other person using or responsible for the use of any such motor vehicle with the express or implied consent *163of the insured.” Id. at 431, 375 A.2d 639; see also Selected Risks Ins. Co. v. Zullo, 48 N.J. 362, 225 A.2d 570 (1966) (holding automobile liability policies restricting omnibus coverage would be deemed amended to contain omnibus coverage no less broad than what statute required).
The legislative policies that sustain such a broad interpretation of compulsory automobile liability insurance are simply inapplicable in this context. The umbrella policy is designed to protect the policyholder in the event of a rainy day. No rain is falling on this policyholder because there was no agency involved in the use of the vehicle. The case against the policyholder has been dismissed. It may be that a claim can validly be made under this umbrella policy but not on the rationale advanced by the majority.
Justice POLLOCK joins in this opinion.
For affirmance and remandment — Chief Justice PORITZ, and Justices HANDLER, GARIBALDI, STEIN and COLEMAN — 5.
For dissenting — Justices POLLOCK and O’HERN — 2.

 In his dissent, Justice Clifford described the Motor Club opinion as reaching "what surely must be the outer limits of the 'hell or high water doctrine’ ” of coverage. 73 N.J. at 439, 375 A.2d 639 (quoting Small v. Schuncke, 42 N.J. 407, 416, 201 A.2d 56 (1964) (Hall, J. concurring)).