New York Insurance Coverage Law Update

August 31, 2020 | Insurance Coverage

Federal District Court Denies Insured’s Request To Add Claim For Bad Faith And Consequential Damages Based On Insurer’s Denial Of Coverage

In this declaratory judgment action, the insured filed a motion for leave to add a new claim against his insurer for its alleged “bad faith” failure to indemnify him in the underlying bodily injury action.  The insured’s proposed claim also sought damages because he was allegedly “forced” to sell property to pay for his defense in the underlying action.  The United States District Court for the Western District of New York denied the insured’s motion, explaining that a “bad faith” claim based solely upon the denial or delay of coverage would be futile because it is not recognized under New York law.  The court also held that the insured’s proposed claim did not allege a valid basis to recover consequential damages because the insured did not cite to a specific provision in his policy contemplating coverage for such a loss.  [Perez v. Foremost Ins. Co., 2020 U.S. Dist. LEXIS 106815 (W.D.N.Y. June 18, 2020).]

Federal District Court Enforces Two-Year Limitation Clause In Homeowner’s Policy To Deny Supplemental Claim

Martha Ventilla’s bathtub overflowed and flooded her Manhattan apartment on January 31, 2015, and she reported the claim to her homeowners insurer the next day.  The insurer paid to remediate for damage to certain contents.  Then, more than two years later, Ventilla made a supplemental contents claim.  Her insurer disclaimed coverage on the basis that the claim was time barred by the policy’s two-year limitation clause.  The United States District Court for the Southern District of New York upheld the disclaimer, rejecting Ventilla’s equitable estoppel argument that she relied on the insurance company to tell her what to do.  The court reasoned that an insurer is under no obligation to remind an insured of the policy’s terms, and that “upon acceptance of an insurance policy and in the absence of fraud or misrepresenta­tion, an insured is charged with knowledge of all of the terms and conditions of the policy.”  [Ventilla v. Pacific Indem. Co., 2020 U.S. Dist. LEXIS 120669 (S.D.N.Y. July 9, 2020).]

Court Holds Landlord Covered As Additional Insured For Accident On Sidewalk Adjacent To Leased Premises

The claimant was injured while working as a porter when he fell from a ladder placed on the sidewalk adjacent to a building owned by Bergen Projects, LLC (“landlord”) and leased to a tenant for a bar/restaurant at 899 Bergen Street.   The claimant sued the landlord which sought coverage as an additional insured under the tenant’s policy.  The tenant’s policy provided additional insured coverage for liability arising out of the ownership, maintenance or use of that part of the premises leased to the tenant.  The tenant’s insurer moved to dismiss the landlord’s declaratory judgment action on the grounds that the claimant fell on a public sidewalk and the tenant’s main-tenance obligations did not extend to the sidewalk. The Supreme Court, New York County, denied the motion, citing New York appellate cases holding that such additional insured coverage gives rise to coverage for landlords for accidents “on abutting public sidewalks”.  The court noted that the claimant testified that there were several entrances into the restaurant along Bergen Street.  The court concluded that the sidewalk where the accident occurred was necessarily used for access in and out of the leased premises and, by implication, was part of the leased premises.  [1000 Dean LLC v. Bergen Projects, LLC, 2020 N.Y. Misc. LEXIS 3021 (N.Y. Sup. Ct. N.Y. Cnty June 29, 2020).]

Court Finds No Coverage Because Insured Made Material Misrepresentations Regarding Where Vehicle Would Be Garaged

State Farm sought a default judgment against its insured and the insured’s medical providers declaring that State Farm was not obligated to pay no-fault benefits in connection with a motor vehicle accident because of material misrepresentations as to where the vehicle was garaged on the application for the auto policy.  In support of its motion, State Farm submitted a printout of the history of the auto’s license plate, a forged paystub submitted with the insured’s application, an authentic paystub from the same employer, and the police accident report.  The court held that the evidence was sufficient to find material mis-representations vitiating coverage under the policy.  The court also found that the insured’s refusal to answer questions at the insured’s EUO was sufficient to find that the accident was staged and, therefore, not covered. [State Farm Fire & Cas. Co. v. Accelerated Surgical Ctr., P.C., 2020 N.Y. Misc. LEXIS 1811 (N.Y. Sup. Ct., N.Y. Cnty May 5, 2020).]

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