JUSTINA L. BENAMARA v. AMERICAN INTERNATIONAL INSURANCE CO. OF NJ

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-3534-03T33534-03T3

JUSTINA L. BENAMARA,

Plaintiff-Appellant,

v.

AMERICAN INTERNATIONAL

INSURANCE CO. OF NJ,

Defendant-Respondent.

 

Argued May 17, 2006 - Decided June 1, 2006

Before Judges Conley and Winkelstein.

On appeal from the Superior Court of New Jersey, Law Division, Burlington County, L-3127-02.

Robert L. Sexton argued the cause for appellant.

Stephen C. Wolf argued the cause for respondent (Thomas Dempster, III, attorney; Mr. Wolf, on the brief).

PER CURIAM

Plaintiff Justina Benamara appeals from a January 23, 2004 summary judgment dismissing her complaint for personal injury protection (PIP) benefits as an additional insured of a policy issued by defendant American International Insurance Company. We affirm substantially for the reasons expressed by Judge Covie-Leese in her written tentative disposition as supplemented by her reasons placed on the record on January 23, 2004, following oral argument. See R. 2:11-3(e)(1)(A)&(E). We add only the following.

Born on December 20, 1981, plaintiff had been licensed to drive in New Jersey since 1999. On September 12, 2000, she was injured in a motor vehicle accident involving a vehicle driven by a third party. She sought PIP benefits for her injuries. At the time of the accident she was a resident of the household of her father, Daniel Benamara, and was operating her father's 1991 Subaru.

Plaintiff's father applied for insurance coverage from American International in April 2000. In his application, he represented that (a) he was the only driver living in his household; (b) there were no "household members over age 12 not included" as a driver; and (c) he used both vehicles to be insured under the policy 100% of the time. The representations were not true. Plaintiff was a household member over the age of twelve and a driver. According to the certification of Eric Meier, an underwriter for defendant, had Daniel Benamara informed American International that his daughter was a member of the household and a licensed driver, the insurance premium "would have increased approximately 195% of the premium for Daniel Benamara alone." Accordingly, as a result of Daniel Benamara's misrepresentations, defendant denied PIP coverage for plaintiff.

New Jersey has a strong public policy against the proliferation of insurance fraud. Palisades Safety & Ins. Ass'n v. Bastien, 175 N.J. 144, 151 (2003). The State also has a strong public policy of compensating third parties for losses sustained in automobile accidents. See id. at 147-48; Fisher v. N.J. Auto. Full Ins. Underwriting Ass'n, 224 N.J. Super. 552, 557-58 (App. Div. 1988). Under the circumstances here, balancing these competing interests, we agree with the trial judge that plaintiff, who was seeking first-party coverage in her claim for PIP benefits, may not benefit by the misrepresentations made by her father when he procured insurance coverage. To allow recovery under these circumstances would encourage parents of young drivers to lie on their applications for insurance coverage to obtain a reduced premium.

It is beyond dispute that plaintiff's father made multiple misrepresentations in his application for insurance coverage. Defendant relied on his misrepresentations. Had he been truthful, the premium for him alone would have increased by 195%. Under these circumstances, we agree with the Law Division judge's conclusion that plaintiff was not entitled to PIP benefits. See Palisades, supra, 175 N.J. at 152; see also Lovett v. Alan Lazaroff & Co., 244 N.J. Super. 510, 513 (App. Div. 1990) (plaintiff injured in an automobile accident who sought PIP coverage under policy issued to his mother as an additional insured was not entitled to coverage because policy cancelled ab initio as a result of nonpayment of premium; court distinguished claim of additional insured from that of innocent third party injured as a result of the operation of the insured vehicle).

Plaintiff claims Palisades, supra, is distinguishable, in that the plaintiff there, the spouse of the insured, was found by the Court to be "in a unique position to be aware of the other spouse's interactions with the insurer of the household vehicles." 175 N.J. at 151. The Court considered the plaintiff in Palisades as a responsible adult who should have made herself aware of "important insurance-related matters pertinent to [her] household." Ibid. While we agree with plaintiff that she is not in the same position as the plaintiff in Palisades, as plaintiff here was a high school student living with her father and depending on him for insurance coverage, we nevertheless do not construe Palisades to stand for the proposition that only those members of the household who should have been aware of "important insurance-related matters" may be denied coverage. The Palisades Court emphasized New Jersey's significant public policy against rewarding fraud in the procurement of insurance coverage. Ibid. And, though there may be instances where a first-party insured is entitled to recover under a void insurance policy, we do not believe the facts in this case, which reflect multiple misrepresentations in plaintiff's father's insurance application, support such a conclusion. See Remsden v. Dependable Ins. Co., 71 N.J. 587, 589 (1976) ("a material factual misrepresentation made in an application for insurance may justify recission if the insurer relied upon it to determine whether or not to issue the policy").

Plaintiff suggests the proper remedy is not to deny coverage, but to require payment of the premium that would have been charged had plaintiff's father provided accurate information on his application for insurance. We disagree. That remedy would encourage a parent to not disclose the existence of a youthful driver living in the household if the only penalty would be payment of the correct premium if the deception was later discovered.

 
Affirmed.

(continued)

(continued)

5

A-3534-03T3

June 1, 2006