New York Insurance Coverage Law Update

Parked Truck Was Being “Used” To Transport Sheet Metal That Allegedly Cut Insured

An employee returning to work after taking a break in her employer’s parking lot allegedly was injured when she walked into a piece of sheet metal extending beyond the tailgate of a co-worker’s parked truck, which the co-worker had planned to deliver to a junkyard after work. Thereafter, the employee demanded arbitration as a named insured under her insurance policy’s supplemental underinsured motorists provisions. The insurer contended that the woman’s injuries did not arise out of the “ownership, maintenance or use” of the co-worker’s truck, and it asked the court to stay the arbitration. The court ruled that although the truck was not being operated at the time of the accident, it was being “used” by the co-worker to transport the sheet metal to the junkyard after work. The court denied the application to stay arbitration, concluding that the employee’s claim fell within the scope of the insurance policy. [Matter of Liberty Mut. Fire Ins. Co. v. Malatino, 2010 N.Y. Slip Op. 06204 (3rd Dep’t July 22, 2010).]

Homeowner’s Policy Deemed “Ambiguous” As To Limitations Period For Actions Seeking Additional Living Expenses

After a fire in the insured’s home rendered it uninhabitable, the insurer reimbursed the insured for some, but not all, of her claims for additional living expenses, and she filed suit to collect the balance. The insurer contended that the action was time barred because it had not been filed within two years “after the loss.” The court ruled that the term “loss” was ambiguous as to the applicable limitations period respecting actions seeking additional living expenses. Accordingly, the court found the insured’s action was not time barred. [Villa v. Sterling Ins. Co., 2010 N.Y. Slip Op. 20284 (2d Dep’t July 16, 2010).]

No Coverage For Construction Manager That Did Not Have Written Contract With Insured Providing It Would Be Named An Additional Insured

A project’s construction manager was sued in a personal injury action allegedly arising from the project. The manager sought coverage as an additional insured under an insurance policy that had been issued to a subcontractor which had been hired to perform steel work on the project. The court observed that, for the manager to qualify as an additional insured, the subcontractor must have agreed in writing with the manager to add it as an additional insured on the policy, but the court found that no such agreement existed. The court ruled that, contrary to the manager’s contention, the contract between the general contractor and subcontractor was not such an agreement because the manager was not a party to it. [Skanska USA Bldg Inc. v. Burlington Ins. Co., 2010 N.Y. Slip Op. 31954(U) (Sup. Ct. N.Y. Co. July 15, 2010).]

Four-Month Delay In Disclaiming For Failure To Notify “As Soon As Practicable” Deemed Unreasonable

An electrical contractor obtained liability coverage naming a construction manager as an additional insured. An employee of the contractor allegedly was injured at the construction site in March 2007 and brought suit against the manager on November 21, 2007; the manager notified the insurer on January 7, 2008. On January 25, 2008, the insurer stated it would investigate whether the manager was covered and whether the notice was timely. The insurer disclaimed coverage on May 8, and the manager brought suit. The court explained that the insurer’s contention that the manager had not notified it “as soon as practicable” would have been apparent upon examination of the manager’s January 7, 2008 tender. Accordingly, it concluded, the insurer’s four-month delay in disclaiming on this ground was unreasonable as a matter of law pursuant to §3420(d) of the New York Insurance Law. [Hunter Roberts Constr. Group, LLC v. Arch Ins. Co., 2010 N.Y. Slip Op. 05861 (1st Dep’t July 1, 2010).]

Spoilage And Resulting Loss Of Income Allegedly Due To Blackout Are Not Recoverable Under Equipment Breakdown Insurance Policy

An insured fruit and vegetable store in New York City asserted claims under its “equipment breakdown” insurance policy. The insurer acknowledged that coverage existed for damage to the insured’s refrigeration units and other systems caused by a power surge. However, the repair of the equipment was halted by an unrelated power outage at the premises, and the insurer denied coverage for the spoilage and loss of income resulting from the power outage. The court sustained the denial, explaining that coverage required an “accident” to covered equipment, and the policy excluded “tripping off line” from the definition of accident. The court found that the electric company’s equipment had “tripped off line” as a result of its automatic relay protection systems responding to a grid disturbance. Accordingly, the court ruled that the insured was not entitled to coverage for spoilage and loss of income. [Fruit & Vegetable Supreme, Inc. v. The Hartford Steam Boiler Inspection & Ins. Co., 2010 N.Y. Slip Op. 20267 (Sup. Ct. Kings Co., July 7, 2010).]

 Reprinted with permission.  All rights reserved.