On January 2, 2008 , the NJ Appellate Division decided the case of Hardy v. Liberty Mutual holding that PIP and UM coverage could be available to a passenger in a stolen vehicle who claimed that he was unaware that the vehicle was stolen. The plaintiff was a 14 year old boy who was seriously injured while riding as a rear seat passenger in a stolen vehicle. He sought PIP and UM benefits as a family member under his grandmothers automobile insurance policy with Liberty Mutual. Liberty Mutual denied PIP coverage based on an exclusion for any insured occupying an auto without the owners permission and denied UM coverage under an exclusion for bodily injury to an insured while using a vehicle without a reasonable belief that he is entitled to do so. A suit to compel benefits was filed and the trial court granted summary judgment to Liberty Mutual. The Appellate Division reversed and remanded the case for a trial as to whether the plaintiff had a “reasonable belief” that he was entitled to occupy the car. The Appellate Division found that , “an exclusion from coverage of persons who did not know or have reason to know that they were riding in a car that was being operated without the permission of the car’s owner would be unrealistic and not objectively reasonable”.
http://www.judiciary.state.nj.us/opinions/a2153-06.pdf