An insurer is not entitled to immunity from suit over an insured's election of coverage where the insurer gave out erroneous information, the New Jersey Supreme Court has ruled. The insured phoned his auto insurer to ask how to obtain coverage for his wife, who had just purchased a new car. He specifically requested that her coverage be as good as his coverage. The customer representative told him that adding his wife and her car to his current policy would provide each of them with a $500,000 policy limit. In fact, this split that limit between them.

The couple was severely injured in a single accident in the same vehicle. They sought a declaratory judgment that each was entitled to benefits up to $500,000.
The insurer argued it was immune under a state statute protecting insurers from suit "on account of the election" of coverage by the insured.

But the court held that the insurer was not entitled to immunity under these circumstances.
"Here, having specifically asked for a separate policy for [his wife] that would give [her] the same coverage that [the insured] had, and having been assured that by adding [her] to the existing policy, each of the spouses would have the same coverage that [he] had preceding [her] addition to the policy, the declarations page that plaintiffs received immediately thereafter did not dispel the inaccurate advice that [the insured] had been given. ...
"Under these circumstances, and in light of the great importance of the declarations page in determining the reasonable expectations of an insured ... we conclude both that the policy documents were ambiguous and that it was reasonable for plaintiffs to believe that they had secured the 'double coverage' that they thought they had been promised," the court held. Read More