## Facts

- Kathleen Stolarz and her husband, New York residents, were injured in a two-car accident in Woodbury, New York.
- Stolarz was driving a company car leased by her employer, Blue Cross/Blue Shield of New Jersey.
- The company car was registered in New Jersey and insured under a New Jersey policy issued by New Jersey Manufacturers Insurance Company (NJM) to the employer and written to conform to New Jersey law.
- Stolarz regularly garaged the company car at her home in Monroe, New York.
- The tortfeasor’s liability insurer paid the Stolarzes $20,000, equal to its policy limits.
- The NJM policy provided $35,000 in UM/UIM coverage and included a clause (tracking a New Jersey statute) reducing UM/UIM payments by sums paid by or for legally responsible parties.
- The Stolarzes sought the full $35,000 without reduction, contending that New York public policy invalidates such offset provisions in underinsurance coverage.

## Issues

1. Whether New York or New Jersey law governs interpretation and enforceability of the UM/UIM offset clause in a New Jersey-issued policy issued to a New Jersey employer, where the accident occurred in New York and the driver was a New York resident.
2. If New Jersey law governs, whether the offset clause is enforceable to reduce the $35,000 UM/UIM limit by the $20,000 already recovered from the tortfeasor’s insurer.

## Decision

- The New York Court of Appeals reversed the lower courts.
- The court held there was no true conflict requiring application of New York law on these facts; in any event, New Jersey law applied under New York choice-of-law principles.
- Applying New Jersey law, the court enforced the offset clause, permitting NJM to reduce its UM/UIM obligation by the $20,000 already paid.

## Legal Principles

- In insurance-contract disputes with multistate contacts, New York applies interest analysis and a grouping-of-contacts approach, focusing on the jurisdiction with the greatest interest in the insurance relationship.
- For a policy issued in another state to an in-state corporate insured and structured to comply with that state’s insurance statutes, the issuing state’s law will generally govern interpretation of coverage terms, including statutorily required UM/UIM offsets.
- New York’s public-policy exception will not be used to override a foreign state’s statutorily mandated insurance provision absent a sufficiently strong and directly applicable New York policy interest in regulating that particular contract.

## Conclusion

Because the UM/UIM policy was issued in New Jersey to a New Jersey employer and incorporated a New Jersey statutory offset, New Jersey had the dominant regulatory and contractual interest; New Jersey law applied and the offset clause was enforceable to reduce NJM’s UM/UIM payment by the amount already recovered from the tortfeasor’s insurer.


Matter of Allstate Ins. Co. (Stolarz–N.J. Mfrs. Ins. Co.), 81 N.Y.2d 219, 613 N.E.2d 936 (N.Y. 1993)