In AIG Centennial Ins. Co. v. Thompson, A-4358-11T2, (App. Div. Nov. 19, 2012), the New Jersey Superior Court, Appellate Division, in an unpublished opinion[1], held that an insurer who paid PIP benefits in excess of its policy limits was not entitled to reimbursement from the commercial tortfeasors insurance for payments in excess of the injured plaintiff’s policy limits. In that case, the underlying plaintiff was injured in a motor vehicle accident when she was struck by a dump truck owned by Thompson Trucking. The plaintiff was insured under a basic automobile policy issued by AIG which provided PIP benefits in the amount of $15,000. Thompson Trucking was insured under a commercial auto policy issued by ARI Mutual which only provided PIP benefits to pedestrians. AIG mistakenly notified the plaintiff that she had $250,000 in PIP benefits. The plaintiff’s actual limit of PIP benefits was $15,000. The plaintiff ultimately obtained treatment well in excess of the $15,000 PIP limit. ARI reimbursed AIG $15,000, the limits of PIP coverage under the AIG policy. AIG ultimately paid all of the plaintiff’s PIP expenses, then sought reimbursement from ARI Mutual for the balance. In holding that ARI Mutual had no obligation to reimburse AIG in excess of the $15,000 PIP limit under the AIG policy, the court reasoned that:

While acknowledging its error, AIG argues that ARI Mutual nevertheless should be responsible for reimbursing PIP medical expense amounts in excess of the basic automobile insurance policy limit because if AIG had hewed to the $15,000 limit, ARI Mutual would have been exposed to Davis’ claim for the difference as part of the personal injury action. That may theoretically be true, but we are not engaged in an equitable redistribution divorced from the Legislature’s intent. Instead, we are involved with a purely statutory reimbursement scheme between insurers, and Davis’ purported rights vis-a-vis ARI Mutual are not relevant to our determination.

ARI Mutual relies on N.J.S.A. 39:6A9.1’s phrase “pursuant to” in arguing that reimbursement over the $15,000 policy limit is not available to AIG because the PIP medical expense benefits paid to Davis were not those pursuant to the amount in the actual policy. We agree.

AIG’s payment of up to $250,000 was not made within the confines of the basic automobile insurance policy covering Davis. Instead, it was an ad hoc adjustment that suited AIG’s litigation strategy. Hence, the payment was not made “pursuant to” or “in accordance with” the PIP Reimbursement statute. See N.J. S.A. 39:6A-9.1. The payment was made because AIG was potentially estopped from doing otherwise after providing representations to Davis for up to $250,000 in PIP benefits, upon which Davis reasonably relied. Furthermore, ARI Mutual was not involved in perpetrating the mistake; it was an operational gaffe made by AIG alone in the administration of its insurance business. Thus, the court “should not abruptly increase the exposure of [ARI Mutual]” to compensate AIG for its own error. IFA Ins. Co., supra, 270 N.J. Super. at 626.

Accordingly, the tortfeasor’s insurer was not held responsible for the plaintiff’s insurer’s mistake.

[1]“No unpublished opinion shall constitute precedent or be binding upon any court. Except for appellate opinions not approved or publication that have been reported in an authorized administrative law reporter, and except to the extent required by res judicata, collateral estoppel, the single controversy doctrine or any other similar principle of law, no unpublished opinion shall be cited by any court. No unpublished opinion shall be cited to any court by counsel unless the court and all other parties are served with a copy of the opinion and of all contrary unpublished opinions known to counsel. New Jersey Rules of Court, R. 1:36-3.

What It Means to You

Correctly convey your policy limits to the insured. You may otherwise be estopped from providing less coverage if you have erroneously advised the insured that they are entitled to coverage not provided under the policy. Additionally, you may not be able to recover the full amount of the benefits paid, even where the tortfeasor’s insurer is obligated to reimburse you. If you are the tortfeasor’s insurer, carefully review the plaintiff insurer’s policy to ensure that you are not paying for another company’s mistake.