New York Insurance Coverage Law Update

June 28, 2022 | Insurance Coverage

Northern District Holds That Late Notice Bars Coverage Under Property Policy

In late 2016, a roofing contractor stepped through the insured’s roof resulting in damage to the roof and internal water damage.  The insured did not file a claim with its property insurer until early 2018, more than a year later.  The insurer, Acadia Insurance Company, reserved rights, investigated and then disclaimed based on late notice under the policy, which required prompt notice of a loss.  The United States District Court for the Northern District of New York granted summary judgment to the insurer declaring that the insured’s late notice precluded coverage under the property policy, regardless of whether the insurer was prejudiced.  The court found that the insurer did not waive its late notice defense because it reserved rights and then disclaimed.  As such, “no reasonable jury could conclude” that the insurer “voluntarily and intentionally relinquished its late notice argument.”  The court also found that the insured’s belief that the loss would not exceed its deductible was not a reasonable excuse because the policy required that “all losses are to be reported as soon as practicable if they are to become the basis of a claim” and, regardless, notice was late because the insured waited ten months to provide notice even after it knew the deductible would be exhausted.  [13 State St. LLC v. Acadia Ins. Co., 2022 U.S. Dist. LEXIS 83013 (N.D.N.Y. May 9, 2022).]

Southern District Finds No Coverage Under Homeowners Policy Because Premises Was More Than A “Four-Family Dwelling”

The insured, an owner of a multi-unit building in Brooklyn, sued his homeowners insurer, Nationwide, after it denied coverage for losses the insured incurred as a result of a fire in the building.   The policy covered the “residence premises,” defined as the “one, two, three or four-family dwelling” at “the address shown on the Declarations.”  However, the building contained at least six apartment units.  The United States District Court for the Southern District of New York granted summary judgment to the insurer, reasoning that six-family dwellings are not covered under the policy.  The court rejected the insured’s “hair-splitting” argument that the language of the policy was ambiguous because it uses the phrase “family dwelling” instead of “unit building”.   The court also rejected the insured’s argument that Nationwide should have inspected the property before issuing the policy.   [Koczwara v. Nationwide Gen. Ins. Co., 2022 U.S. Dist. LEXIS 84485 (S.D.N.Y. May 10, 2022).]

Court Issues Jury Instructions For Environmental Coverage Trial

The Supreme Court of New York for New York County issued jury instructions in a two-decades-old coverage litigation as to whether Century Indemnity must cover Brooklyn Union’s environmental remediation costs under excess policies issued by Century from 1941 to 1969.  The policies covered the costs only if Brooklyn Union proved that the environmental damage was accidental, rather than expected or intended by Brooklyn Union.  As to the point in time for assessing whether the damage was accidental, the court decided to instruct the jury that the inquiry turns on what Brooklyn Union knew or did not know at the time of the acts causing the damage as opposed to what it knew or did not know at the start date of each policy.   As to how to instruct the jury on whether Brooklyn Union had proven that the damage was accidental (rather than expected or intended), the court rejected the insurer’s proposal to include a sentence that “if the operator of the plant was aware of a substantial probability of damage”, the jury may find that the damage was not accidental.  [Century Indem. Co. v. Brooklyn Union Gas Co., 2022 N.Y. Misc. LEXIS 1971 (Sup. Ct. N.Y. Cnty May 11, 2022).]

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