An insurance company is obligated to pay a nearly $1.2 million wrongful death settlement after the New Jersey Supreme Court ruled that it can't compel a municipal joint insurance fund to contribute. The case is Statewide Ins. Fund v. Star Ins. Co., 2023 N.J. LEXIS 205 (N.J. 2023).

An insurance policy with Star Insurance Co. provides coverage to Long Branch after other insurance coverage is exhausted, but the liability protection provided by the city's membership in Statewide Insurance Fund is self-insurance, which does not trigger that clause in the Star policy, the New Jersey Supreme Court ruled.

The decision could be a cautionary tale for insurance companies about policy language seeking to share liability with entities formed under New Jersey's joint insurance fund statute.

$1.18 Million Settlement

The dispute stems from a 2012 accident in Long Branch where Ezra Cornman, 12, suffocated after the collapse of a tunnel he was digging on the beach. His parents sued the city and agreed to a $1.18 million settlement in 2018. But payment of that award has been held up by the dispute between insurance companies.