In September 2016, Defendant Trend Motors, Ltd. (Trend) provided Defendant Aquilar with a loaner vehicle for her personal use while her vehicle was serviced. Aquilar’s negligent operation of the loaner vehicle caused it to strike Plaintiff Huggins’s car. As a result, Plaintiff sustained serious injuries. Trend held a garage policy with Federal Insurance Company (Federal) that insured Trend’s vehicles for up to $1,000,000 in liability coverage. Plaintiff filed a complaint seeking compensation for the injuries and loss of income he suffered due to the accident. Federal disclaimed liability, arguing that Aquilar did not fit the policy’s definition of an insured because she held bodily injury coverage through GEICO. In Huggins v. Aquilar, the trial court held that the Federal policy’s definition of an insured constituted an illegal escape clause and held Federal to the full policy limit in liability coverage. The New Jersey Appellate Division declined to review the trial court’s ruling. The New Jersey Supreme Court ruled that the disputed coverage provision in the garage policy at issue constituted an illegal escape clause, which may not be used to evade the minimum liability requirements for dealership vehicles set by the Chief Administrator of the Motor Vehicle Commission.
