Third Party Unable to File Suit Against Insurance Company without Assignment of Rights
Defendants 48 Branford Place Associates and Palladium Associates were sued due to the death of Andre Henry and serious injuries of Benverneuto Webster arising from a shooting at a ballroom/night club operated by Palladium. Neither Palladium, nor 48 Bradford obtained liability insurance coverage for assault and battery. In Stephens v. 48 Branford Place Associates, 2015 N.J. Super. LEXIS 69 (Law Div. April 24, 2015), the plaintiff amended the complaint to add claims against several insurance carriers and insurance brokers for the defendants.
After amending the complaint, some of the carriers and brokers moved to dismiss the amended complaint, arguing that an injured party has no right to sue an insurance company of the defendant without an assignment. The trial court agreed that no direct claim against the insurance company existed.
The court cited to several Appellate Division decisions that supported this position. The cases cited in favor of such a claim were factually distinguished by this court.
However, the court pointed out that the law is not the same as to brokers. New Jersey does permit an injured third party to assert a claim against a broker as an intended beneficiary of the agreement to purchase the appropriate coverage. Because of the importance of liability insurance, members of the general public are deemed to be third party beneficiaries of an agreement between a business proprietor and its insurance broker to procure coverage.
Thus, there are two separate lines of cases that distinguish between third party claims against insurance carriers and insurance brokers. The law is clear that while an injured third party may not maintain a direct claim against a defendant’s insurance company without an assignment from the insured, an action is permitted against the broker.
Accordingly, the trial court granted the motion to dismiss filed by the insurance companies but denied the motion requesting a dismissal of the amended complaint by the brokers.
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Stephen Gilbert
Tom Begley
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