New Jersey Appellate Division Holds That Failure to Disclose Excess Nature of Coverage on Certificate of Insurance Does Not Constitute a Misrepresentation

In The State-Operated School District of the City of Paterson v. American Alternative Ins. Co., the New Jersey Superior Court, Appellate Division examined allegations of misrepresentation by a transportation company retained by a school district to transport its students. The school district solicited bids for companies to provide transportation, noting in its bid specifications that the selected company must obtain insurance (including automobile liability insurance) naming the school district as an additional insured. The transportation company chosen by the school district entered into a contract requiring it to obtain such insurance. The company was also required to provide a certificate of insurance confirming that the school district had been named as an additional insured on these policies. The transportation company provided this certificate to the school district.

Following a fatal accident on a school bus, the school district sought coverage from the transportation company’s automobile liability insurer. The insurer denied coverage, stating that its policy was excess to any other liability coverage held by the school district. The school district sued the transportation company, contending that the company negligently misrepresented the nature of its insurance.

After the completion of discovery, the defendant transportation company filed a motion for summary judgment, which was granted. On appeal, the Court emphasized that neither the bid specifications nor the contract between the school district and company required the company to obtain primary insurance. Rather, these documents simply required the company to obtain insurance naming the school district as an additional insured. The Court further noted that there was no evidence that the school district relied upon (or even reviewed) the certificate of insurance in entering into the contract with the transportation company.

The Court therefore affirmed the trial court’s order granting summary judgment to the defendant transportation company.