New York Insurance Coverage Law Update

Sagging Roof Was Not A Collapse, Court Confirms

The owner of a building in the Bronx sought coverage under its property policy for a damaged roof, claiming it “collapsed,” a covered cause of loss under the policy.  The court granted the insurer’s motion for summary judgment, finding that “no part of the premises fell to the ground” and that there was only “sagging and cracked roof members.”  [HB Holdings & Realty Management LLC v. Tower Ins. Co. of N.Y., 2016 N.Y. Slip Op. 31857(U) (Sup.Ct. Westchester Co. Sept. 30, 2016).]

Insureds’ Misrepresentation That Property Would Be Their Primary Residence Was Sufficient For Insurer To Rescind Policy, Second Department Decides

Owners of a residential property in Brooklyn procured a homeowners insurance policy, representing that they would occupy the property as their primary residence. After a fire at the property, their insurer discovered that the owners did not occupy the premises as their primary residence and the insurer rescinded the policy. The owners sued, the trial court ruled in favor of the insurer, and the Appellate Division, Second Department, affirmed. The Second Department noted that the owners admitt-ed that, at the time the application was completed, they did not intend to occupy the premises. It then ruled that the representation that the property was an owner-occupied primary residence – even if innocent or unintentional – was a material misrepresentation of a then-existing fact that was sufficient for rescission under New York Insurance Law § 3105. [Joseph v. Interboro Ins. Co., 2016 N.Y. Slip Op. 08050 (2d Dep’t Nov. 30, 2016).]

Trial Court Should Not Have Given Insured Second Chance To Appear At EUO, Appeals Court Declares

After a health care provider sued to recover assigned first-party no-fault benefits, the trial court granted the insurer’s motion for summary judgment conditionally dismissing the complaint if the plaintiff’s assignor failed to appear for an examination under oath (“EUO”) to be “re-notice[d]” by the insurer. The Appellate Division, Second Department, reversed, ruling that upon finding that the insurer had timely and properly denied the plaintiff’s claims on the ground that its assignor had failed to appear for duly scheduled EUOs, the trial court should not have given the plaintiff’s assignor an opportunity to cure, but should have granted the insurer’s motion for summary judgment “unconditionally.” [Integrative Pain Medicine, P.C. v. Allstate Ins. Co., 2016 N.Y. Slip Op. 51525(U) (App. Term, 2d Dep’t Oct. 13, 2016).]

Policy’s Two-Year Suit Limitation Provision Applied To Business Income Coverage, Fourth Department Rules

The insured sought to recover lost rents under an insurance policy providing coverage for, among other things, special business income (“SBI”) losses due to the interruption of the insured’s business operations arising from a covered direct physical loss of or damage to its property. The trial court denied the insurer’s motion for summary judgment, but the Appellate Division, Fourth Department, reversed. The Fourth Department found that the “only fair construction” of the policy was that the two-year suit limitation provision contained in the policy’s “Property Choice Coverage Part” was a condition that “unambiguously” applied to the entire coverage part, including the SBI coverage form under which the insured sought to recover. The appellate court concluded that the SBI coverage was not “separate and distinct coverage” falling outside the coverage part to which the two-year limitation period condition applied. [Albert Frassetto Enters. v. Hartford Fire Ins. Co., 2016 N.Y. Slip Op. 07481 (4th Dep’t Nov. 10, 2016).]

Hotel Was Additional Insured Even In Absence Of Allegations That Named Insured Had Been Negligent Or At Fault, First Department Says

An employee of Transel Elevator, Inc. allegedly was injured when he lost his footing on a hotel stairway, and he sued the hotel. The hotel’s insurer maintained that the hotel was entitled to a defense under a policy issued to Transel, which provided additional insured coverage to the hotel for losses caused by Transel’s “acts or omissions” or “operations.” The trial court agreed, Transel’s insurer appealed, and the Appellate Division, First Department, affirmed. The First Department reasoned that the alleged injuries to Transel’s employee resulted from his “acts or omissions” while performing his work, even though he fell on a stairway, not in the elevator that was being repaired.  The court noted that the additional insured provision at issue did not depend upon a showing that Transel’s conduct had been “negligent or otherwise at fault.” [Aspen Specialty Ins. Co. v. Ironshore Indem. Inc., 2016 N.Y. Slip Op. 08016 (1st Dep’t Nov. 29, 2016).]