A $170,000 mid-trial settlement demand was allegedly rejected. The jury came back at $4.25 million - and now the excess carrier is taking the primary insurer to court.
That is the central thread of a federal action filed on April 12 in the District of New Jersey, where excess insurer Merchants Mutual Insurance Company is seeking declaratory relief against primary carrier State National Insurance Company and its administrator, Next Insurance. The case, Merchants Mutual Insurance Company v. State National Insurance Company, Inc. et al. (No. 2:26-cv-03828), also names the insured, Regal Restoration USA LLC, the driver of the vehicle, George J. Grob, and the underlying claimants as defendants.
The dispute traces back to a rear-end collision on the Garden State Parkway in Saddle Brook, New Jersey on September 22, 2021. According to the filing, Jennifer Kaminski was riding as a passenger in a vehicle driven by her husband, David Speiser, when their car was struck from behind by a vehicle driven by Grob and owned by Regal Restoration. Kaminski allegedly sustained injuries including disc bulges at C-5 and C-6, a cerebral concussion, and a traumatic brain injury. A vocational economic analyst estimated her past and future lost earnings at $1,683,973.
State National had issued a business auto policy to Regal with a $1 million liability limit. Merchants provided an excess policy with $5 million in coverage sitting above that primary layer.
According to the court filing, the underlying plaintiffs demanded $900,000 to settle before trial. During trial, they reduced their demands to $600,000, then $200,000, and finally $170,000. State National and Next allegedly rejected the mid-trial demands and never moved beyond a $130,000 Offer of Judgment. The defense had already stipulated to liability and proceeded to trial on damages alone. On April 11, 2025, the jury awarded $4.25 million. The court later entered a total judgment of $4,758,364.21, including prejudgment interest and attorney's fees.
What makes this case especially relevant for the insurance industry is what Merchants alleges happened - or rather, did not happen - behind the scenes. The excess carrier claims it was never notified of the underlying lawsuit until after the verdict. The excess policy required the insured to provide notice "as soon as practicable" of any occurrence that might trigger a claim and to immediately forward any legal papers. According to Merchants, none of that occurred - not when the suit was filed in January 2022, not during arbitration in September 2024, and not during the April 2025 trial.
Merchants denied coverage on August 15, 2025, citing late notice and what it described as appreciable prejudice from being shut out of the process entirely.
The filing raises two claims. The first asks the court to declare that the late-notice disclaimer is valid and enforceable. The second targets State National and Next directly, alleging they breached their duty of good faith under New Jersey law by failing to pursue settlement within their own policy limits - even as demands dropped well below that threshold.
No court has ruled on the merits of these claims. The matter remains at its earliest stage, and no responses have been filed by any defendant.
