Repossession Specialists v. Geico Ins. Co., 423 N.J. Super. 518 (App. Div. 2012). Annetta Jackson defaulted on her car loan, and Repossession Specialists (“Repossession”) was sent to repossess the vehicle. After the tow bar had already been attached and the repossessor was pulling away in the car, Jackson jumped on the tow bar and tried to open the trunk to get some of her belongings. She fell and was injured. She sued Repossession and others. Repossession had insurance, but Repossession and other defendants made a claim on Jackson’s insurer too, claiming that Repossession was a permitted user of the vehicle and was therefore covered by Jackson’s policy. On cross-motions for summary judgment, the Law Division rejected Repossession’s argument. The Appellate Division affirmed in an opinion by Judge Ostrer.
The policy did cover persons using the vehicle with Jackson’s “permission.” But Judge Ostrer found that “Repossession’s use was of right, and Jackson lacked the power to revoke or prevent Repossession’s use.” The use was as of right because Jackson had granted the lender a security interest in the vehicle, and the lender had the right, by contract and under the Uniform Commercial Code, to repossess the vehicle upon default. “Use as of right pursuant to irrevocable authority is inconsistent with the concept of permission.” “Permission” implies that the “permitting” party had the right to withhold consent, which Jackson did not.
The principle of construing insurance policies favorably to the insured buttressed this result. Imposing repossession risks on owners’ insurers would only raise the cost of owners’ policies. Yet, owners have no say in who their repossessor is or how the repossessor conducts itself. Moreover, an insured’s reasonable expectation is that covered permitted users include only friends, family and the like, not a repossessor. Finally, requiring owners to cover repossession risks would also go against the intent of New Jersey’s compulsory insurance laws to keep premiums down.