USA – NEW JERSEY Trends and Developments Contributed by: Jeffrey M. Pollock, Pollock Law, LLC
South Millville Properties v Westchester Surplus Lines Insurance Co (D.N.J. 2023) applies New Jersey’s effi- cient proximate cause rule to hold that a copper theft exclusion does not bar fire loss, and Navigators Spe- cialty v Citizens Insurance Co of America (D.N.J. 2024) reads additional insured coverage to reach direct as well as vicarious liability. The point is not that fed- eral courts always rule for insurers, but that a federal court deciding an unsettled question of New Jersey law makes a prediction, predictions in this Circuit tend toward the restrictive, and the policyholder bears the consequence without a state forum to correct it. Certification corrects this, and it works when counsel use it. In Chiaccheri v Zurich American Insurance Co (6 August 2026), the Supreme Court answers certified questions from the Third Circuit on commercial auto UIM limits, holding that the statutory parity require- ment runs between the named insured’s UIM limit and the employee’s, not between UIM coverage and third- party liability limits. The policyholder lost, which is pre- cisely why the case instructs: certification guarantees an authoritative answer, not a favourable one. Counsel facing an unsettled question in federal court should press for certification early, before a federal consen- sus forms that makes the question look settled. What still cuts for policyholders The thesis would be dishonest without the coun- terweight, and the counterweight is real. Courts still apply the ambiguity rule with force. In Motil v Wausau Underwriters Insurance Co (App Div, 2024), the court refuses to enforce a UIM step-down provision because the declarations page creates a reasonable expecta- tion of full limits that conflicting language elsewhere cannot defeat. The reasonable expectations doctrine is not dead; it simply does less work in commercial disputes than in personal lines. Long-tail coverage remains the strongest ground. In Northfield Mass Associates v Travelers Indemnity Co (Law Div, 30 October 2025), the court holds non-cumu- lation clauses unenforceable in construction defect cases involving progressive and indivisible damage, extending Spaulding Composites v Aetna beyond environmental contamination. The court weighs the effect of the clauses rather than their labels, refusing to let drafting cosmetics defeat the continuous-trigger
doctrine. It is a trial-level ruling and carries the prec- edential weight that status implies, but its reasoning is orthodox New Jersey law and counsel should cite it. The strongest response to everything argued here deserves its best statement. New Jersey’s can- ons were never rules of outcome, only rules of construction; AC Ocean Walk , Norman Internation- al and MIST each involve language the courts find unambiguous, and New Jersey has always enforced unambiguous language; a run of insurer wins over four years is a sample, not a shift; and the Fair Conduct Act shows the system correcting itself. That argument carries real force, and no honest advocate should pre- tend otherwise. It is answerable. The question is never whether a court enforces unambiguous language, but how readily it finds language unambiguous, and on that measure the movement runs one way. A court that finds “in any way connected with” clear enough to require no causal nexus, that lets extrinsic evidence defeat a defence, and that disposes of a first-impression exclusion on the pleadings has moved the threshold, whatever it says about the canons. Refuting the thesis takes a decision in which the Supreme Court declines to enforce a deliberately broad exclusion in a com- mercial dispute, and this period has produced none. A bifurcated jurisdiction emerges. New Jersey’s tradi- tional protections hold where the doctrine is settled, the policyholder is unsophisticated, or the coverage question involves progressive injury across policy periods. They weaken where the dispute is commer- cial, the insurer drafted the exclusion broadly and deliberately, and the question is new. Practical consequences Five consequences follow for anyone litigating New Jersey coverage. • Treat forum as a merits decision. Where a policy- holder can defeat diversity, keep the case in the Law Division. Where removal looms, plan for certifi- cation from the outset rather than after an adverse prediction. • Assume courts read exclusions literally. Connective phrases carry full breadth. Ambiguity arguments
341 I NSURANCE L I T IGATI O N 2026
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