The “Deemer” statute imposes on all insurance companies which transact, or are authorized to transact automobile insurance business in New Jersey, the obligation to include in all policies issued in the United States and Canada, a provision that such policies will provide coverage at least equal to New Jersey’s “standard policy” statutory minimums, whenever the insured vehicle is used or operated in the State of New Jersey. The limitation-on-lawsuit verbal threshold was automatically included in insurance policies issued by carriers subject to the “Deemer” statute, which limits the ability of an injured party to sue for non-economic damages. The issue before the Court in Cupido was whether an out-of-state resident whose automobile was insured by an insurance company which is not authorized to write either private passenger automobile or commercial motor vehicle insurance business in this State, but controls affiliate companies which are authorized to underwrite commercial policies in New Jersey, is subject to the limitation on lawsuit verbal threshold under the “Deemer” statute.

The Cupido case stems from an automobile accident involving Plaintiff, John Cupido, and Defendant, William Perez. At the time of the accident, the Plaintiff resided in Pennsylvania and was operating an automobile insured by Nationwide Mutual Insurance Company through a policy of insured issued in Pennsylvania. The policy contained a “Full Tort” option, permitting the Plaintiff to sue for injuries sustained in automobile accidents without limitations.

Nationwide was not authorized to transact private passenger automobile or commercial motor vehicle insurance business in New Jersey; however, Nationwide controlled several subsidiary insurance companies which were authorized to transact commercial business in the State, including Nationwide Mutual Fire Insurance Company, National Casualty Company, Titan Indemnity Company and Nationwide Affinity Insurance Company. While the Nationwide affiliates were authorized to conduct commercial insurance business, none of the affiliates were authorized to conduct private passenger automobile insurance business in New Jersey.

The Defendant filed a Motion for Summary Judgment, which argued that the Plaintiff was subject to the limitation-on-lawsuit verbal threshold, and further, that the Plaintiff failed to present sufficient evidence of a qualifying injury to permit recovery of non-economic damages. In response, the Plaintiff filed a cross-motion seeking an order declaring that he was not subject to the verbal threshold because he was insured by a carrier which was not authorized to conduct private passenger insurance business in New Jersey, rendering the “Deemer” statute inapplicable. The Plaintiff’s cross-motion was granted.

The Defendant appealed the order and the issue was taken up by the Appellate Division. The Appellate Division reviewed the statutory language of the “Deemer” statute, with particular emphasis on whether the phrase “an insurer authorized to transact or transacting automobile or motor vehicle insurance business in this State” includes an insurer that is only authorized to transact commercial motor vehicle insurance in New Jersey. On appeal, the Plaintiff argued that the “Deemer” statute was inapplicable because Nationwide’s affiliates were only authorized to insure commercial motor vehicles in New Jersey, and by that definition, were not conducting automobile insurance business as contemplated by the statute.

The Court, however, found that the “Deemer” statute:

… does not restrict an out-of-state insurer’s obligation to include certain New Jersey insurance coverages when vehicles are used or operated in New Jersey to only those insurers that are affiliated with insurance companies authorized to write private passenger automobile insurance in the State. Otherwise, the Legislature would not have included the terms “or motor vehicle” in the second sentence of the first paragraph of the statute, and would not have provided separate statutory definitions for the terms “automobile” and “motor vehicle.” To construe those two terms interchangeably would render one of the terms superfluous.

Thus, the Court held that so long as an affiliate of an insurance company transacts some motor vehicle insurance business in the State, regardless of whether it is private passenger automobile or commercial, the “Deemer” statute applies and the Plaintiff is subject to the verbal threshold.

By enlarging the ambit of the “Deemer” statute, the Appellate Division has effectively increased the number of individuals subject to the limitation-on -lawsuit verbal threshold in New Jersey. As a result, the Court has made it more difficult for Plaintiffs who sue for non-economic damages caused when operating automobiles insured by carriers which have only a limited business presence in this State.

Daniel B. McMeen, Esq.