Surplus lines insurance fills a void left when authorized insurers choose to not to cover higher risk markets. It is a market of last resort for some businesses, including for example, some in the construction industry, that would otherwise be left without any coverage. New Jersey Courts have recognized the significant role surplus lines insurance plays in the availability of coverage and has shown a willingness to accept that this market must have the ability to define the risks it is able to cover and limit or exclude those it is not. For this reason, New Jersey courts will enforce the express terms of a policy.
In another in the line of surplus lines cases to be decided by New Jersey Appellate Courts, in Transcontinental Contracting v. The Burlington Insurance Company, the Court upheld clear and unambiguous language that excluded coverage for injuries suffered by an employee of any insured under the policy. This was the second time that the Appellate Division upheld a cross-liability exclusion.
Significantly, the court found that where the terms in a commercial insurance policy are clear and unambiguous, the insureds’ reasonable expectations simply cannot be violated.
See Transcontinental Contracting v. The Burlington Insurance Company at http://www.judiciary.state.nj.us/opinions/a4029-08.pdf