New Jersey statute prohibiting the use of "step-down" clauses only applies to accidents occurring after the passage of the legislative amendment.

A step-down clause limits the UM/UIM coverage available to an employee of a named insured to the amount of coverage available under the employee's personal motor vehicle policy. Where a commercial insurance policy was in effect at the time of a Legislative Amendment prohibiting step-down clauses, and the policy contained a step-down clause, the Amendment will only apply to accidents which occur after the Amendment's effective date. Further, where the insurer can anticipate application of the Amendment to the accident, given the date of the accident, there is no manifest injustice because the inconvenience to the insurer does not outweigh the deleterious impact on New Jersey employees injured while in the course and scope of their employment.

Case Law Alert - 3rd Qtr 2011