In my last post, I addressed the basics of concurrent causation here in New Jersey. The question that remains, however, is how New Jersey’s courts will interpret a policy containing a clause that denies coverage for a covered cause of loss when accompanied by an excluded cause of loss. Such anti-concurrent causation clauses are commonplace in contracts of insurance.
The first issue is whether New Jersey courts will enforce an anti-concurrent causation clause in an insurance contract. While the issue has not been fully decided by the New Jersey Supreme Court, it does appear that, when properly drafted, anti-concurrent causations clauses will be enforceable against policyholders.
Where included and excluded causes of loss occur concurrently, it appears that New Jersey’s lower courts have not been predisposed to find coverage. The Court cannot assume that New Jersey’s highest court would find otherwise. Therefore, the Court rejects Jay–Mar’s argument that the part of the insurance policy provision excluding from coverage losses occasioned by simultaneously occurring included and excluded causes violates the state’s public policy.1
Thus, until the New Jersey Supreme Court decides to weigh in, we are left with an educated guess as to how these clauses will play out New Jersey is extremely protective of its citizen consumers:
We consider this exclusionary clause in the context of well-settled principles of insurance-contract construction. In sum, policies of insurance, as contracts of adhesion, will be construed liberally in favor of the insured in order to meet the insured’s reasonable expectations, and, consequently, ambiguities will be construed in favor of the insured, and exclusions and exceptions will be construed strictly against the insurer.2
Any ambiguity should be read in order to favor coverage for the insured. This is because insurance contracts are lengthy and dense documents that are difficult to understand. As the Miller & Pincus Court acknowledged in quoting Through the Looking Glass,3 even the simplest of words can have numerous meanings:
“When I use a word,” Humpty Dumpty said, in rather a scornful tone, “it means just what I choose it to mean-neither more nor less.”
“The question is,” said Alice, “whether you can make words mean so many different things.”
“The question is,” said Humpty Dumpty, “which is to be master-that’s all.”
1 Assurance Co. of America, Inc. v. Jay-Mar, Inc., 38 F.Supp.2d 349 (D.N.J. 1999).
2 Garden State Indem. Co. v. Miller & Pincus, 340 N.J.Super. 148, (App. Div 2001).
3 Lewis Carroll, Through the Looking Glass, 163 (W.W. Norton & Co. 1971) (1872).