Self-Insurance Obligations Under NJ Law: Forecasting the Future of Benjamin Moore

The NJ Supreme Court has recently elected to hear appeals in two coverage actions involving the same basic issue ' namely, reconciling the application of the Owens-Illinois “continuous trigger theory” with the application of specific policy provisions under New Jersey law. In the first of these two cases, Spaulding Composites Company, Inc. v. Aetna Casualty & Surety, the court strongly affirmed the viability of the continuous trigger theory, invalidating a clear and unambiguous non-cumulation clause that it found conflicted with this approach. Spaulding Composites Company, Inc. v. Aetna Casualty & Surety, 176 N.J. 25, 46 (2003). In the second case, Benjamin Moore & Company v. Aetna Casualty & Surety, which is pending, the court must now determine how to apply the continuous trigger theory to self-insurance features contained in a series of unambiguous policy endorsements which do not appear to conflict with a continuous trigger. No. A-4423-01T2F, 2003 WL 1904383 (App. Div., Jan. 14, 2003), appeal granted, 176 N.J. 70 (2003). Specifically, the court must consider whether the continuous trigger theory should be applied to deductibles in the same one-occurrence-per-year manner that it is applied to losses. The trial court and Appellate Division in Benjamin Moore have both concluded that the continuous trigger theory is properly applied to the calculation of deductibles. At this point, it is uncertain how the Supreme Court will resolve this issue, but the court may well have tipped its hand with the Spaulding decision.