Until late September, 2013 was a quiet year for New Jersey insurance case law, without a single important decision reported. The courts are now catching up, with two recent coverage decisions from the Supreme Court and one from the federal court for the District of New Jersey. All three decisions address issues of allocation and contribution, and should reshape the landscape of New Jersey coverage law.
Farmers Mutual
Farmers Mutual Fire Ins. Co. of Salem v. N.J. Property-Liability Insurance Guaranty Association, 215 N.J. 522 (2013), principally addressed allocation when an insurance company is insolvent. In past years, the New Jersey Property-Liability Insurance Guaranty Association (PLIGA) filled the gap in coverage created by the insolvency. Indeed, it stood in the shoes of the insolvent insurance company. However, in 2004, the legislature changed the governing statute for PLIGA, mandating that PLIGA did not need to pay until all other solvent insurance was exhausted. In Farmers Mutual, the solvent insurance company paid the share of the insolvent insurance company, and then sought reimbursement from PLIGA. The New Jersey Supreme Court decided that until all solvent insurance policy limits are exhausted, the amended statute exempts PLIGA from the allocation scheme set forth in Owens-Illinois v. United Ins. Co., 138 N.J. 437 (1994), and Carter-Wallace v. Admiral Ins. Co., 154 N.J. 312 (1998).
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