Don’t Judge A Book By Its Cover (NJ)

In Evanston Insurance Co. v. A&R Homes Development, LLC, et al., the New Jersey Superior Appellate Division held that a declarations page alone cannot create a reasonable expectation of coverage.

Evanston Insurance issued a CGL policy to A&R Homes, a development company hired to construct an apartment building in Jersey City.  The injured plaintiff in the underlying action was an employee of a subcontractor engaged by A&R.  The Plaintiff was allegedly injured at the job site when he fell more than twenty feet.

Evanston initially agreed to provide A&R a defense pursuant to a reservation of its rights.  However, once Evanston confirmed that the Plaintiff was a subcontractor employee, it initiated the instant declaratory judgment action seeking a ruling of no coverage based on the policy’s Employer’s Liability Exclusion.

On appeal, the Insured argued, inter alia, that the policy’s declarations page created a reasonable expectation of coverage for the Plaintiff’s injuries, which was sufficient to overcome any policy exclusions. Specifically, the Insured relied upon Lehroff v. Aetna, a 1994 App. Div. case that found UIM coverage based upon the policy declarations page, holding that “the average automobile policy holder” should not be held responsible to “undertake to attempt to analyze the entire policy in order to penetrate its layers of cross-referenced, qualified and re-qualified meanings.”  Ultimately, the Evanston Court did not find the holding in Lehroff to be analogous to the Evanston CGL policy, noting also that the Evanston declarations page did specifically state that all coverage would be subject to the “following forms and endorsement.”

Thus, this ruling is useful as it holds that prior case law regarding reasonable expectations of coverage in the UIM context are not always applicable to CGL policies.

Thanks to Vivian Turetsky for her contribution to this post.  Please email Colleen Hayes with any questions.