N.J. Supreme Court affirms exclusion of intentional wrong claims in insurance policies

The New Jersey Supreme Court has confirmed the enforceability of a specific endorsement within an employer’s liability policy that excludes coverage for "intentional wrong" claims. This decision was made on December 12, concerning an employee's personal injury lawsuit against their employer.

In the case referred to as Rodriguez, the employee sustained injuries while performing work tasks and subsequently filed for workers' compensation benefits and a civil lawsuit alleging negligence and intentional misconduct by the employer. The employer's insurer provided coverage for the workers' compensation claim but denied coverage for the civil suit under the policy's employer’s liability section. The denial was based on exclusions in the policy, including one for "bodily injury intentionally caused by [the employer]" and a New Jersey-specific endorsement excluding coverage for "intentional wrong" claims under state law.

The trial court initially sided with the insurer, dismissing the insured’s claims, a decision that was later upheld by both the Appellate Division and the Supreme Court. The ruling clarified that Part One of the policy did not cover the civil lawsuit since it only applied to workers’ compensation claims. Meanwhile, Part Two of the policy also did not offer coverage due to its exclusion clauses.

Furthermore, the Supreme Court noted that there was no gap in coverage because workers’ compensation benefits were already provided under Part One of the policy for negligence-related claims. As such, there was no need for additional liability coverage under Part Two.

Additionally, intentional act claims were excluded from coverage due to both a general exclusion in Part Two and a New Jersey-specific endorsement designed to bar such claims. This endorsement was deemed not to violate public policy as it aligns with longstanding practices of enforcing exclusions for intentional conduct.

Questions regarding this ruling can be directed to Christian A. Cavallo, Jeffrey L. Kingsley, David L. Brown, or other members of their Global Insurance Services team.