The Appellate Division of New Jersey’s Superior Court recently addressed a case involving insurance liability coverage for personal injuries suffered by a person who lived with the policyholder. Finding that an exclusion in the policy barring liability coverage for a person who lives with the insured was unambiguous and clearly written, the Court affirmed the trial court’s summary judgment in favor of the insurer.
In Iaeck v. Barnaba and Federal Insurance Company (unpublished), plaintiff brought suit after falling down a stairway in the condominium she was living in with defendant Barnaba, who owned the house. Plaintiff had lived with Barnaba since 2008, had a verbal lease with her during that time, and paid rent. In March of 2019, plaintiff fell down a stairway because it was allegedly unlit, had a loose handrail, and Barnaba had placed boxes and other things on the steps. She suffered several breaks to her leg and required multiple surgeries, which caused permanent scarring.
Plaintiff asked Federal, Barnaba’s home insurer, to open up a bodily injury claim under the policy. After investigating the claim, Federal denied coverage on the basis that the “Covered person’s or dependent’s personal injury exclusion excluded coverage. This exclusion specifically stated that it did not cover damages for personal injury for which the insured can be held legally liable to “a person who lives with you.” Plaintiff then amended the negligence Complaint she had filed against Barnaba to assert direct claims against Federal and seeking a declaratory judgment that the policy provided coverage for her injuries.
Federal and Barnaba each filed summary judgment motions and the trial court, relying on the clear and unambiguous language of the exclusion, granted summary judgment to Federal, holding that it did not have any indemnity or defense obligations related to plaintiff’s personal i jury claims against Barnaba. On appeal, the Court focused on whether the exclusion in the policy applied to the personal injury claim because plaintiff lived with Barnaba.
Applying New Jersey’s standards for policy interpretation, including the doctrine that exclusions are to be read narrowly, the Court held that Federal’s exclusion applied. The undisputed material facts demonstrated that plaintiff did, in fact, live with Barnaba. She shared the use of the common parts of the property with Barnaba and had her own bathroom and bedroom. The Court found the language to be plain, specific, clearly written, and unambiguous. It also determined that it was not contrary to public policy because it is reasonable for an insurer to exclude coverage for liability for personal injuries to people who live with the covered person.
The Court acknowledged that the phrase “lives with” has not yet been analyzed in the insurance context in New Jersey, but noted that cases from other jurisdictions have consistently held that it is unambiguous and plain in its meaning. Accordingly, the Court found that the trial court correctly granted summary judgment to Federal and affirmed the judgment.
