New York Insurance Coverage Law Update

Court Finds No Coverage For Stolen Jewelry Based On Conveyance Clause And Unattended Auto Exclusion

 The insured, a jewelry business, filed a coverage action against Certain Underwriters at Lloyd’s of London, which denied coverage to the insured under a policy purchased for the insured’s jewelry.  The insured’s complaint alleged that after attending a marketing event in New York City, the insured’s team put 84 pieces of jewelry in a duffel bag and loaded it into a double-parked SUV while the insured’s driver stood within three feet of the open rear door and kept an eye on things.  When the SUV arrived in Great Neck, Long Island later that evening, the insured discovered that the jewelry was stolen.  The Supreme Court, New York County, dismissed the complaint because the Personal Conveyance Clause in the policy limited coverage to property “in transit” when “in hand or sight” of the insured.  The court rejected the insured’s argument that the property was not “in transit,” reasoning that its “ordinary meaning” as used in Black’s dictionary is “being conveyed by a carrier.”  And because the insured’s team admittedly did not witness the theft, the court concluded that the jewelry was not “in hand or sight” of the insured when stolen.  The court also held that the Unattended Automobile Exclusion unambiguously applied because it precluded coverage for property in an auto “unless, at the time of the loss …, there is [an insured designee] actually in or upon such vehicle.” [Alpha & Omega Manhattan Corp. v. Lonmar Global Risks, Ltd., 2023 N.Y. Misc. LEXIS 4398 (N.Y. Sup. Ct., N.Y. Cty. August 21, 2023).]

Court Holds That Notice Three-Days After Expiration of Extended Reporting Period in Claims-Made Policy Dooms Coverage

Henry Hill Oil Services, LLC, hired the insured, Stomley Sales & Consulting, LLC, as its consultant for an oil well in North Dakota.  The oil well blew out; and the State of North Dakota assessed penalties on Henry Hill who then sued the insured.  Stomley provided notice to its insurer, Certain Underwriters at Lloyd’s of London, under policies that contained a claims-made Oil & Gas Consultants Professional & Pollution Liability coverage part and a New York Choice of Law and Venue endorsement.  Underwriters denied coverage because, among other things, notice was three-days after the expiration of the claims-made extended reporting period.  The Supreme Court, New York County, granted summary judgment to Underwriters, citing to the Appellate Division, First Department’s decision in Certain Underwriters at Lloyd’s London v. Advance Tr. Co., Inc., which held that “a claims-made policy can set a precise timeline for reporting regardless of any potential prejudice.”   The Supreme Court also noted that New York’s Insurance Law and regulation governing claims-made coverage did not apply because the policy was not issued in New York. [Certain Underwriters at Lloyd’s, London v. Stomley Sales & Consulting, LLC, Index No. 651616/2021 (N.Y. Sup. Ct., N.Y. Cty. Sept. 22, 2023).]

Southern District Holds That Insurer Cannot Sue Co-Insurer For Contribution Because Of Release By Insured

Rightech, Inc. provided temporary technical workers to BlueStream Professional Services for a construction project.  A worker on the project was injured and sued BlueStream, which was insured by Liberty Mutual and added as an additional insured on Rightech’s policy with Zurich.  After the underlying action was filed, BlueStream and Rightech entered into a settlement agreement in connection with a class action alleging that they improperly classified wage payments and failed to pay overtime to workers.  The settlement agreement between BlueStream and Rightech agreed to release each other and their “insurers” for claims that “BlueStream has or which could be asserted on its behalf … relating in any way to any … agreement” between them and Rightech’s “work for BlueStream ….”  Liberty sued Zurich seeking additional insured coverage for BlueStream in connection with the underlying personal injury action and argued that the settlement agreement was not intended to impact BlueStream’s right to additional insured coverage under Zurich’s policy.  However, the United States District Court for the Southern District of New York disagreed and held that the agreement unambiguously released BlueStream’s claim for additional insured coverage against Zurich, Rightech’s insurer.  [Liberty Mut. Fire Ins. Co. v. Zurich Am. Ins. Co., 2023 U.S. Dist. LEXIS 136032 (S.D.N.Y. Aug. 3, 2023).]