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Harvard Industries Inc. v. Aetna Casualty & Surety Co.11/18/1993
FISHER, J.S.C.
This action concerns the interpretation and application of what is known in the insurance
industry as the "absolute pollution exclusion." Such an exclusion, contained in a policy of insurance issued by defendant American Empire Surplus Lines Insurance Company ("American Empire") to plaintiffs, gave rise to the present dispute. This absolute pollution exclusion derives its name from the fact that it does not limit its applicability to claims arising from "sudden and accidental" events as in a clause recently considered by our Supreme Court in Morton International, Inc. v. General Accident Insurance Company of America, N.J. (1993).
The issues before this court as to the scope of the pollution exclusion are of novel impression in New Jersey. The parties have referred to a number of unreported decisions concerning the "absolute pollution exclusion," as well as one reported decision, by the courts of this state. Those decisions, however, do not focus on the precise arguments raised by plaintiffs in seeking to avoid the effect of the exclusion under the circumstances of this case.
I
INTRODUCTION
On January 15, 1993, plaintiffs Harvard Industries, Inc., and its related entities, commenced an action in this court seeking insurance coverage from approximately forty insurance carriers for a variety of occurrences described in the complaint.
American Empire has moved for summary judgment, contending that the "absolute pollution exclusion" contained in its policy of insurance bars coverage of Harvard's claims. To resolve this motion, the court must consider the manner in which our courts interpret insurance policies, the relevant language of the policy, and the nature of the claims for which Harvard seeks coverage from American Empire.
II
THE JUDICIAL APPROACH TO THE INTERPRETATION OF INSURANCE POLICIES
It is often stated that insurance contracts must be liberally construed in favor of a policyholder, and strictly construed against the insurer, in order to provide the protection for which the insured bargained. Kampf v. Franklin Life Ins. Co., 33 N.J. 36, 41, 161 A.2d 717 (1960). In this regard, insuring clauses are to be viewed liberally in favor of coverage and exclusions are to be strictly construed. See Sinopoli v. North River Ins. Co., 244 N.J. Super. 245, 250, 581 A.2d 1368 (App. Div. 1990). If the words of the policy are ambiguous, or the policy's language uncertain, then the policy will be construed in the insured's favor. Corcoran v. Hartford Fire Ins. Co., 132 N.J. Super. 234, 243, 333 A.2d 293 (App. Div. 1975). This does not mean, however, that a court should scour a policy in an effort to locate an ambiguity or contort the language of the policy to create uncertainty. Sinopoli, supra, 244 N.J. Super. at 250.
Since insurance contracts are ordinarily drafted and prepared by an insurer "guided by his own interests and goals in the transaction," Simses v. North American Co. for Life and
Health Ins., 175 Conn. 77, 394 A.2d 710, 714 (Conn. 1978), they are often viewed as "contracts of adhesion." Such disparate bargaining power has prompted our courts to construe such contracts in the light most favorable to the insured since the policy is often offered to the insured on a take-it-or-leave-it basis. See, Mazzilli v
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