WCM recently won summary judgment in the New Jersey Superior Court on behalf of StarNet Insurance Company in Knoll v. StarNet Insurance Company, a first-party jeweler’s block dispute, arising from the loss of insured jewelry. At issue was an out-of-safe policy exclusion barring coverage for situations in which the insured was neither wearing the jewelry at the time of loss or in the same or an immediately adjacent room. With no reported decisions interpreting the policy exclusion, and limited authority across the country interpreting similar location-based exclusions, Knoll was a significant victory for insurers.
In Knoll, the insured, a doctor, was returning home to New Jersey from the Miami International Airport. He was carrying a roller bag purportedly containing valuable jewelry. As he boarded a tram, he left the bag behind on the platform, where it sat for approximately one hour until it was retrieved by an airport canine patrol officer. When the bag was ultimately retrieved in airport lost and found, there were no jewels inside.
The policy contained an out-of-safe endorsement barring coverage for lost jewelry (with a combined value of over $50,000) unless: (1) the loss occurs when the jewelry is being worn by the insured or a member of his household; or (2) the loss occurs while the jewelry is being carried by hand by the insured or a member of his household; or (3) the jewelry is lost while in the same room as the insured or an immediately adjacent room; or (4) the jewelry is lost while in a locked safe or deposited in a bank.
StarNet moved for summary judgment against the complaint because the evidence (which included video surveillance footage, police reports, and the insured’s sworn statement) showed the loss did not take place while in the insured’s possession or in the same or adjacent room. The insured cross-moved for summary judgment, arguing the terms “loss” and “carried by hand” were not defined in the policy and ambiguous, and could, therefore, be interpreted to mean the loss occurred at the moment the insured left the bag on the platform. This interpretation, the insured argued, was consistent with New Jersey’s “reasonable expectations” doctrine.
WCM argued that the policy wording was clear and unambiguously barred coverage. With no reported decisions interpreting StarNet’s exclusion, WCM cited cases from other jurisdictions interpreting similar location-based exclusions and argued that the principles underlying those decisions ought to govern the outcome. The court agreed and granted StarNet’s motion for summary judgment.
The court reasoned that the terms “loss” and “carried by hand” were unambiguous and, in light of the facts presented, served to bar coverage. In doing so, the court also noted the bag itself never went missing, a fact which compelled the logical conclusion that the act of leaving the bag behind and the loss of jewelry were two separate events. According to the court, “it would be unreasonable to expect coverage under these circumstances.”
While courts in other jurisdictions have applied location-based exclusions in the first-party context, New Jersey, a state known for creating coverage through its reasonable expectations doctrine, had never interpreted the StarNet policy exclusion. Knoll is significant because it demonstrates that when a court is presented with sufficient facts obtained by a thorough claim investigation, and clear policy wording, even wording the court has never seen before, exclusions can be enforced as written and intended. As Judge Mongiardo aptly put it: “This is a location-based endorsement which shall be enforced by the Court. To do otherwise, in the absence of any ambiguity, would be to write for the insured a better policy of insurance than the one purchased. This the Court cannot do.”
Dennis Wade and Michael Gauvin of WCM represented StarNet. If you have any questions about this decision or its import, please call or email Dennis.