By Jonathan P. Holtz, Esq.

When you have a client with an automobile insurance UM/UIM limit lower than their BI limit, you need to explore the potential for a reformation count.  The obligations and immunities for automobile insurance companies related to reformation are often misunderstood.

As a starting point, New Jersey’s Fair Disclosure statutes, N.J.S.A. 39:6A-23 and 17:28-1.9, provide immunity to automobile insurance companies for their insured’s failure to choose adequate UM/UIM coverage.  These provisions require the insured to be provided with New Jersey’s Buyers Guide and Coverage Selection Form (CSF).  The CSF must include an acknowledgement by the insured of the available coverage options – and specifically UM/UIM coverage – as well as the limits of the insurer’s liability.  This mandatory requirement to explain UM/UIM coverage was a specific amendment to the statute, showing its importance.  Strube v. Travelers Indem. Co. of Illinois (T.I.L.), 277 N.J. Super. 236, 242 (App. Div. 1994), aff'd sub nom. Strube v. Travelers Indem. Co. of Illinois, 142 N.J. 570 (1995).

Insurance companies will usually attempt to show they provided these two documents and claim that alone entitles them to immunity, which is incorrect.

In order to be entitled to fair disclosure immunity, automobile insurance companies must produce a signed and completed CSF for either the inception of the policy, or if applicable, the relevant policy change period.  This CSF must specifically confirm the insurer explained the insured’s UM/UIM coverage options.  Failure to strictly comply with producing a signed and completed CSF, and acknowledgement of UM/UIM explanation, precludes immunity and can warrant reformation.  See Avery v. Wysocki, 302 N.J. Super 186, 190-92 (App. Div. 1997) (holding completion and execution of the CSF by the insured is “the sine qua non as well as the rational underpinning of the immunity” and “insistence on meticulous compliance with” the requirements is necessary.)  See also Baldassano v. High Point Ins., Co., 396 N.J. Super. 448, 455 (App. Div. 2007) (holding a signed and completed CSF is required if it is to be evidence of the insured’s “knowing election or rejection of any option” and that the CSF must be “completely filled out and signed by the insured [because] “that’s the only way it makes sense…”)

Caselaw notes insureds who obtained policies with increased BI limits, but minimum UM/UIM limits, were entitled to reformation when no signed and completed CSF could be produced.  A frequent argument by insurance companies is that the UM/UIM limit was contained in the declarations page, and that the policy renewed multiple times, which are immaterial as a matter of law.

Reformation claims are equitable relief not subject to a jury trial. See Weinisch v. Sawyer, 123 N.J. 333, 342 (1991).

Overall, if a client’s UM/UIM limit does not match their BI limit, you should inquire if they intended this discrepancy after UM/UIM coverage was explained by the insurer.  If not, you should file a reformation count, and include a Notice to Produce for the signed and executed CSF from the policy inception, and any relevant policy change period, as well as any proof UM/UIM coverage was explained to the insured.  You should also serve Requests for Admissions and interrogatories addressing the insurance company does not possess any of the aforementioned, and requesting the identity of individuals with firsthand knowledge.  Assuming adequate admissions are received, you should file for summary judgment on the reformation count with support from your client.

Jonathan P. Holtz, Esq., is a Certified Civil Trial Attorney at Bramnick, Rodriguez, Grabas, Arnold & Mangan, LLC in Scotch Plains, NJ where he handles personal injury cases. He can be reached at jholtz@bramnicklaw.com or at 908-322-7000.

Jonathan will also be lecturing on the Essentials of Automobile Insurance Reformation Claims at Boardwalk Seminar 2024 on Friday, April 19, 2024 from 1:15 pm – 1:45 pm during the Auto Program.