## Facts

- Joao Zacarias purchased an Allstate boatowner’s liability policy for a 20-foot recreational boat; the policy included a declarations sheet and an 18-page form with a table of contents and headings.
- The policy defined an “insured person” as the named insured and, if a resident of the household, any relative or dependent in the insured’s care.
- Under a conspicuous heading, “Losses We Do Not Cover,” the policy excluded “bodily injury to an insured person.”
- Zacarias allegedly caused a boating accident while operating the boat, injuring his wife, Maria Zacarias, who resided in his household.
- Zacarias sought liability coverage for his wife’s negligence claim; Allstate denied indemnity based on the intra-family exclusion but provided a defense under a reservation of rights.
- Zacarias filed a declaratory judgment action seeking to invalidate the exclusion as contrary to public policy or, alternatively, to obtain coverage based on reasonable expectations and alleged failure by Allstate/its agent to highlight the exclusion.

## Issues

1. Whether the intra-family exclusion for “bodily injury to an insured person,” read with the definition of “insured person,” was clear and enforceable to bar coverage for a resident spouse’s bodily injury claim.
2. Whether the reasonable-expectations doctrine could override the exclusion based on the policy’s format, alleged lack of notice, or the adhesion nature of the contract.
3. Whether an agent’s alleged failure to call attention to the exclusion, absent an affirmative misrepresentation, could estop the insurer or otherwise create coverage beyond the policy’s terms.
4. Whether public policy required invalidation or limitation of the exclusion in a recreational boatowner’s liability policy.

## Decision

- The Supreme Court of New Jersey affirmed summary judgment for Allstate.
- The Court held the intra-family exclusion was plain, unambiguous, and presented in a manner sufficient to provide notice.
- The Court ruled the reasonable-expectations doctrine did not apply because the policy was not misleading or confusing and contained no ambiguity requiring a pro-insured construction.
- The Court rejected arguments based on adhesion and on the agent’s failure to highlight the exclusion, finding no basis to impose coverage contrary to clear policy language.
- Allstate had no duty to indemnify Zacarias for his wife’s injuries.

## Legal Principles

- Insurance policies are enforced according to their plain language; courts will not revise a policy to supply coverage that the contract clearly excludes.
- Ambiguities are construed against the insurer, but the reasonable-expectations doctrine generally operates when policy language is ambiguous or the policy’s structure is misleading or unusually confusing.
- A clearly stated exclusion, placed under a conspicuous exclusion heading and linked to a defined term, is enforceable even in an adhesion contract absent statutory constraints or deception.
- In contexts lacking a comprehensive mandatory-coverage statutory scheme (unlike certain automobile-insurance settings), exclusions are less likely to be limited on public policy grounds.
- An agent’s failure to specifically highlight an exclusion does not create coverage without affirmative misrepresentation or a specific assurance inconsistent with the written policy.

## Conclusion

The court enforced Allstate’s intra-family exclusion in a boatowner’s liability policy, holding that clear and conspicuously presented policy language barred coverage for a resident spouse’s bodily-injury claim and that neither reasonable expectations, adhesion principles, nor an agent’s silence justified rewriting the contract.


Zacarias v. Allstate Ins. Co., 168 N.J. 590, 775 A.2d 1262 (N.J. 2001)