New Jersey Appellate Division Affirms Summary Judgment for Insurer in Coverage Dispute Seeking Payment for Personal Property Loss Following a Fire at the Insured Property

In Thomas v. Allstate New Jersey Insurance Company, the New Jersey Superior Court, Appellate Division, considered a coverage dispute between the insurer and a person living at the insured property for loss of personal property. Plaintiff was not a named insured under the policy and was not a relative of the named insured. The court affirmed the trial court’s award of summary judgment to the insurer, agreeing with the trial court that coverage was not owed because plaintiff was neither a named insured under the policy or a resident of the household who was related to the named insured.

Plaintiff had previously lived at the insured property with the named insured for a number of years. Eventually, he moved out and plaintiff continued to live in the property and paid all house expenses, including the premiums on the insurance policy. She testified at her deposition that she was aware that her name was not on the policy, but that she did not contact the insurer to be added as a named insured. In her appeal, Plaintiff argued that the trial court erred in failing to reform the policy to find that she was covered for her claims. Plaintiff claimed that she made a mistake because she assumed that she was covered under the policy. Under New Jersey law, plaintiff argued, equity reforms a contract in the case of a mistake of one party.

The Appellate Division rejected plaintiff’s position that the policy must be reformed. Looking at the factual record, the court found that plaintiff admitted during her deposition that she knew her name was not on policy when she received the renewal policy each year. Therefore, she could not maintain that she mistakenly assumed she was covered for the loss. Moreover, the court pointed out that equitable reformation based on mistake was not available to plaintiff under New Jersey law, since the mistake was the result of her own negligence. Accordingly, the Court therefore affirmed the trial court’s order granting summary judgment to the insurer.

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