New York Insurance Coverage Law Update

No Coverage For Landlord As Additional Insured, Court of Appeals Decides

A landlord was an additional insured under a commercial general liability policy issued to a tenant “only with respect to liability arising out of the ownership, maintenance or use of that part of the premises leased to [the tenant].” The New York Court of Appeals ruled that although the landlord may be entitled to a defense in an action commenced against it by a third party for an injury suffered on the leased premises, the policy did not provide coverage for liability to the named insured (tenant) for damage to property owned, rented, or occupied by the named insured. Thus, the Court decided, the insurer was not obligated to defend the landlord in the underlying action brought by the tenant. [VBH Luxury, Inc. v. 940 Madison Assoc. LLC, 2012 N.Y. Slip Op. 01102 (N.Y. Feb. 14, 2012).]

No Coverage Where Insured Was Not Acting As ERISA Fiduciary, Court Of Appeals Rules

After IBM settled a class action alleging that certain amendments to its benefit plans violated provisions of ERISA pertaining to age discrimination, it sought reimbursement from its excess insurer which had disclaimed coverage.  The New York Court of Appeals explained that the policy limited coverage to a “Wrongful Act,” including violations of ERISA by an insured acting in its capacity as an ERISA fiduciary. The Court found, however, that IBM had not been acting as an ERISA fiduciary when it took the actions that gave rise to the allegations in the underlying suit. Because the policy was “sufficiently clear on its face,” the Court declined to speculate about the excess insurer’s choice to subsequently revise its own policy, and held that it was entitled to a judgment that it was not required to indemnify IBM. [Federal Ins. Co. v. International Bus. Machs. Corp., 2012 N.Y. Slip Op. 01320 (N.Y. Feb. 21, 2012).]

Insured’s Belief In Nonliability Found “Unreasonable As A Matter Of Law”

After the insured waited 13 months before notifying his insurer of an incident with a letter carrier, the insurer denied coverage. The insured sued, asserting that he had a reasonable excuse for failing to give timely notice because he had acted in self-defense and did not think the letter carrier “would have the audacity to sue him.” The Appellate Division, First Department, found that the insured’s purported belief in nonliability was unreasonable as a matter of law, “given that the police arrested him, not the letter carrier, for the incident and that he was indicted in federal court for assaulting the letter carrier.” [Aponte v. Government Empls. Ins. Co., 2012 N.Y. Slip Op. 00903 (App. Div. 1st Dep’t Feb. 9, 2012).]

Court Finds Private Right of Action For Hospital Under “Prompt Pay Law”

A not-for-profit hospital sued a Medigap insurer under the New York “Prompt Pay Law” for payment of services it had rendered to six patients. The insurer contended that the law contained no express or implied private right of action and that the plaintiff’s demands for that relief should be dismissed. The court refused to dismiss the complaint, finding an “express legislative intent” to confer a private right of action upon patients and their providers to seek payment directly from an insurer. [Maimonides Med. Ctr. v. First United Am. Life Ins. Co., 2012 N.Y. Slip Op. 22039 (Sup. Ct. Kings Co. Feb. 22, 2012).]

Auto Exclusion Bars Coverage For Auto Accident At Air Show

After a person was seriously injured in an automobile accident during an air show at a park, the county that owned the park was sued. The insurer that had issued a policy to the show’s organizer naming the county as an additional insured denied coverage due to the policy’s auto exclusion. A federal district court upheld the disclaimer, finding that the auto exclusion was “clear and unambiguous,” and that the insurer was not obligated to defend or indemnify the county in the underlying personal injury action. [U.S. Specialty Ins. Co. v. Lebeau, Inc., No. 10-CV-6533L (W.D.N.Y. Feb. 22, 2012).]