A Lie About Where a Car is Garaged May Save Premium But Defeated UM Claim

Deemer statutes, like the one enacted in New Jersey, an automobile insurance company that sells insurance both in New Jersey and in other jurisdictions is deemed to have provided the minimum PIP coverage required by New Jersey law. In Juan Guiterrez-Ganan v. Allstate Insurance Company, No. A-0646-20, Superior Court of New Jersey, Appellate Division (April 1, 2022) Juan argued that the Deemer Statute compelled Allstate to provide uninsured motorist coverage.

Juan Guiterrez-Ganan was injured in an automobile accident when his car was struck by a car driven by an underinsured motorist. Plaintiff sued his insurance company, defendant Allstate Insurance Company (defendant or Allstate), seeking to obtain underinsured motorist benefits for his injuries and losses.

The trial court granted summary judgment to Allstate and dismissed his claims.

FACTS

On April 29, 2016, plaintiff’s car was rear-ended while he was operating his vehicle near an intersection in Atlantic City. The driver of the other car was intoxicated and underinsured. As a result of the accident, plaintiff suffered personal injuries.

However, several years before 2016, plaintiff had lived in Georgia. While in Georgia, he purchased a 2010 Audi Q5, registered the car in Georgia, and obtained insurance coverage in Georgia from Allstate. In 2016 and for at least two years before, plaintiff lived and garaged his car in New Jersey.

Nevertheless, in 2016, plaintiff continued to register his car in Georgia and continued to purchase a Georgia-issued automobile insurance policy from Allstate. In his renewal application submitted in December 2015, for insurance coverage from January 2016 to July 2016, plaintiff listed his address at a street in “Savannah, Georgia.” At that time, plaintiff had a New Jersey driver’s license listing his address in “Galloway, New Jersey.” Plaintiff’s 2016 policy from Allstate did not include automobile medical payments or personal injury protection (PIP).

Plaintiff acknowledged that at the time of the accident in April 2016, he was a resident of New Jersey and had maintained and garaged his car in New Jersey for at least a year and a half before the accident.

Following the accident, Allstate paid $15,015.48 for medical expenses incurred by plaintiff, but refused to pay additional monies. In February 2019, plaintiff sued Allstate seeking underinsured motorist benefits. The trial court explained the reasons for its decision on the record but, after plaintiff appealed, the court amplified its reasons in a written opinion.

The trial court found that plaintiff’s Georgia insurance policy did not contain medical expense coverage required under New Jersey law. The trial court, therefore, held that plaintiff’s claims against Allstate were barred under N.J.S.A. 39:6A-4.5(a). In that decision, the trial court rejected plaintiff’s argument that N.J.S.A. 17:28-1.4, the “Deemer Statute,” effectively meant he had maintained the minimum coverage required under New Jersey law.

ANALYSIS

The appeal involved the interpretation of N.J.S.A. 39:6A-4.5 as applied to the undisputed material facts.

Every owner of an automobile principally garaged in New Jersey must maintain minimum liability insurance coverage, including no-fault PIP coverage of $15, 000 per person. Every standard automobile liability insurance policy shall contain personal injury protection benefits. To determine whether an automobile is principally garaged in New Jersey, the key consideration is where the vehicle is primarily or chiefly kept or kept most of the time. Moreover, any driver moving to New Jersey must obtain a New Jersey driver’s license and register his or her car within sixty days of becoming a resident.

The statutory provision advances a policy of cost containment by ensuring that an injured, uninsured driver does not draw on the pool of accident-victim insurance funds to which he or she did not contribute. The statute gives the uninsured driver a very powerful incentive to comply with the compulsory insurance laws: obtain automobile liability insurance coverage or lose the right to maintain a suit for both economic and non-economic injuries.

Under New Jersey law, plaintiff was required but failed to maintain medical expense benefits coverage. Indeed, that coverage was available to him in his Georgia policy, but he elected not to pay for it. Applying the plain language of N.J.S.A. 39:6A-4.5(a), plaintiff is barred from seeking recovery of economic or non-economic losses.

Plaintiff argued that the bar of N.J.S.A. 39:6A-4.5(a) does not apply to him because he was not operating an uninsured automobile at the time of the accident. Under the Deemer Statute, an automobile insurance company that sells insurance both in New Jersey and in other jurisdictions is deemed to have provided the minimum PIP coverage required by New Jersey law.

The statute’s general purpose is to ensure that New Jersey residents injured as a result of an accident with an out-of-state vehicle will have recourse to policies of insurance that are at least as broad as the presumptive minimal limits of a New Jersey insurance policy. The Deemer Statute requires insurers authorized to transact automobile insurance business in New Jersey to provide coverage to out-of-state residents consistent with New Jersey law whenever the automobile or motor vehicle insured under the policy is used or operated in this State.

Plaintiff argued that, by virtue of this Deemer Statute, his policy included PIP benefits; therefore, he was not uninsured. Allstate gave plaintiff the benefit of the Deemer Statute and paid his medical expenses up to $15, 000. Even if the Deemer Statute did apply, plaintiff’s suit is still barred by N.J.S.A. 39:6A-4.5(a) because he failed to maintain PIP benefits as required by New Jersey law.

The appellate court interpreted the phrase “while operating an uninsured automobile” to mean while operating an automobile that did not have the required PIP coverage. Plaintiff was barred from suing Allstate for underinsured or uninsured benefits seeking economic and non-economic losses stemming from the April 2016 automobile accident.

The action brought by the plaintiff was an insult to an insurer that paid his medical bills even though he had obtained the policy under false circumstance by claiming to reside in Georgia and that his car was garaged in Georgia. Rather than pay anything Allstate should have considered rescinding the policy because it was obtained by a knowing and material fraud. The court, although it reached an obviously correct decision, should have reported the plaintiff to the New Jersey Insurance Department Fraud Division since the policy he obtained from Allstate was based on a material false statement of fact.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

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