New York Insurance Coverage Law Update

July 27, 2023 | Alan C. Eagle | Insurance Coverage

Southern District Holds That Contractor’s Carrier Has Duty To Defend ConEd Even Though Contractor’s Work Ended Months Before The Accident

 A pedestrian tripped and fell on a Bronx sidewalk, and she sued the owner of the adjacent property. In turn, the owner brought a third-party action against ConEd, the utility company that had opened the sidewalk for a gas installation and repair project. ConEd filed a second third-party action against Petmar Builders, ConEd’s contractor. Ten months before the accident, Petmar worked on the sidewalk where the pedestrian allegedly fell and completed a temporary patch that was to be replaced by ConEd but was still in place at the time of the accident. ConEd sought coverage as an additional insured under the contractor’s policy with ACE American Insurance Company (“ACE”), which covered ConEd for liability for bodily injury “caused, in whole or in part, by” the contractor’s work. ACE denied coverage largely because the contractor’s work occurred ten months before the accident. The United States District Court for the Southern District held that ACE had a duty to defend ConEd as an additional insured because the allegations in the pleadings and facts made known to the insurer gave rise to a reasonable possibility that the contractor was a proximate cause of the pedestrian’s bodily injury. The court noted that a defendant’s negligence qualifies as a proximate cause where it is a “substantial cause of the events which caused the injury”, and that the passage of time is only one of many factors. [Consol. Edison Co. of N.Y., Inc. v. Ace Am. Ins. Co., 2023 U.S. Dist. LEXIS 87490 (S.D.N.Y. May 18, 2023)].

 Southern District Holds That Appraisal of Property Loss Premature Before Finding Of Coverage

 A property owner brought an insurance coverage action seeking insurance coverage for damage to the roof on the owner’s property. The owner filed a motion to compel an appraisal to determine the amount of the loss. The United States District Court for the Southern District of New York denied the motion, reasoning that the appraisal as to the amount of loss was premature because the dispute over whether there was coverage had not yet been resolved. [CBKZZ Inv. LLC v. Lloyds, 2023 U.S. Dist. LEXIS 97902 (S.D.N.Y. June 6, 2023).]

Southern District Agrees That Life Insurance Company Properly Denied Benefits Due To Premium Non-Payment

Rebeca Singer sued Massachusetts Mutual Life Insurance Company seeking life insurance benefits under a policy issued to her late husband. When her husband, the insured, procured the policy, he elected a semi-annual payment frequency in the amount of $644 twice a year that could be changed by advanced written notice. From April 2017 to July 2018, the insured remitted semi-annual payments, but no further payments were made. Accordingly, on November 11, 2019, the insurer issued a Notice of Payment Due reflecting that the policy would lapse if the $644 payment was not received by the December 10, 2019 due date or within the 31 day grace period after that date. On December 17, 2019, the insurer issued a Second Notice of Payment Due. Pursuant to the terms of the policy, the insurance “terminat[ed]” if not paid within 31 days of its due date, but the insured could seek reinstatement within 30 days, which the insured did not do. By correspondence dated February 10, 2020, the insurer informed the insured that the policy lapsed because the premium was not paid. The insured died on April 11, 2020. The United States District Court for the Southern District of New York granted summary judgment to the insurer, rejecting the wife’s argument that the insurer’s notices failed to comply with New York Insurance Law § 3211 (a)(1), stressing that the statute should not be used as a “trap” and that “minor variations” from the statutory requirements are not automatically noncompliant. The court also “disregarded” the wife’s unsworn transcription of a purported telephone call during which the insurer allegedly told the insured he could not pay his premium on a quarterly basis because the transcription was unauthenticated. [Singer v. Mass Mut. Life Ins. Co., 2023 U.S. Dist. LEXIS 86817 (S.D.N.Y. May 17, 2023).]

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