Just When You Thought You Understood New Jersey Allocation Law: Implications,Limitations, and Complications in Applying Farmers Mutual Fire Ins. Co. of Salem v. New Jersey Property-Liability Ins. Guar. Ass’n

The New Jersey Supreme Court's recent decision in Farmers Mutual Fire Insurance Company of Salem v. New Jersey Property-Liability Insurance Guaranty Association holding that a 2004 statutory amendment requires all solvent triggered liability policies be exhausted before the Guaranty Association pays statutory benefits for an insolvent's share has created many uncertainties in allocating long-tail liabilities. This article discusses the implications and the significant limitations of the Farmers Mutual decision and the questions it leaves unanswered, and responds to arguments that the decision supports revisiting other situations where New Jersey's Owens-Illinois methodology allocates losses to the insured.