In the Appellate Superior Court case of JACQUELINE KISSEL v. REPOSSESSION SPECIALISTS, INC, it has been determined that a borrowers insurance may not be required to pay claims for injuries allegedly suffered during a repossession.
Third-party plaintiff Repossession Specialists, Inc., appealed an order dismissing its claim for liability insurance coverage from the plaintiff, Jacqueline Kissel’s, own auto insurance carrier for injuries she suffered when her car was being repossessed. Appellant, Repossession Specialists, Inc, contended that it was a permissive user of the injured party’s vehicle as they were towing the vehicle away.
They further argued that due to the auto loan’s contract language, they were a permissive user, and argues that, its liability for negligence must be covered by the vehicle owner’s own auto policy.
The incident occurred on May 10, 2007, at about 10:30 p.m. Before speaking to either of the Kissels, the repossession agent cut an ignition key and drove the Yukon out of the Kissels’ driveway and onto his flatbed tow truck. As he was leaving, Jacqueline Kissel came out of the house. The driver stopped the tow truck and asked if she wanted to retrieve any items from the Yukon. Mrs. Kissel pleaded with him not to take the Yukon. He refused her pleas, stating that he had a repossession order. With the driver’s permission, Mrs. Kissel climbed onto the tow truck to retrieve some items from the Yukon. In the course of doing so, she fell and was injured.
“Both Mr. and Mrs. Kissel were named insureds on the auto policy issued to them by High Point. Under a section headed “Who Is Insured,” the policy stated: “You and any persons you give permission to use this automobile, are insured as long as they use it in the way you intended when you gave permission.” Appellant contends it was a “permissive user” under this policy language and the terms of the lease contract, and therefore, it was entitled to indemnification by High Point if it was found liable for causing injury to Mrs. Kissel.
This precise issue was decided by a panel of this court in Repossession Specialists v. GEICO, supra, 423 N.J. Super. 518, a case in which the same appellant contested denial of coverage in factual circumstances almost identical to this case. Judge Ostrer, writing for that panel, concluded that a repossessor was not a permissive user within the meaning of similar language in an auto insurance policy. Id. at 520. He explained:
Repossession’s use was as of right, and [the owner of the automobile] lacked the power to revoke or prevent Repossession’s use. Use as of right pursuant to irrevocable authority is inconsistent with the concept of permission. . . . [The owner] lacked the power to withhold or revoke use . . . once she granted her lender a security interest.”
The Appellate Court agreed to the initial decision that decided the prior appeal and saw no need to repeat that discussion.
“We reject appellant’s argument that the prior panel wrongly decided the issue because its holding deprives creditors and repossessors of the insurance coverage mandated by N.J.S.A. 39:6B-1(a). Appellant argues that the only authorized exception from mandatory automobile insurance coverage is when the “use” of the automobile arises from actions amounting to “theft or the like.”
In the final decree, the Court ruled that “A repossessor such as appellant must provide its own liability coverage to defend and indemnify it for its alleged negligence in carrying out its operations.”