New York Insurance Coverage Law Update

June 1, 2011 | Insurance Coverage

Insured May Not Recover Attorneys’ Fees From Insurer In Property Damage Case

An insurer sued its insured for a declaration of no coverage, and the court ruled that the insurer was obligated to cover damage to the insured’s building. The court also awarded the insured $41,000 in attorneys’ fees. The insurer appealed, and the Appellate Division, Second Department, reversed the award of attorneys’ fees. The Second Department reasoned that an insured may recover attorneys’ fees only where an insurer with a duty to defend places its insured in a “defensive posture.” However, the policy at issue provided first-party property coverage, not liability coverage with a duty to defend. Consequently, the insured was not entitled to attorneys’ fees. [Insurance Co. of Greater N.Y. v. Clermont Armory, LLC, 2011 N.Y. Slip Op. 04421 (2d Dep’t May 24, 2011).]

No Coverage Where Insured Knew Of Loss Before Policy Issued

The Appellate Division, Second Department, found that the insurer had demonstrated its entitlement to summary judgment as a matter of law by submitting evidence that the insured had become aware of the loss in the underlying action before the insurance policy had been issued. [Abraham Natural Foods Corp. v. Mount Vernon Fire Ins. Co., 2011 N.Y. Slip Op. 04608 (2d Dep’t May 31, 2011).]

Plaintiff Holding Unsatisfied Judgment Against Insured Only May Recover $25,000 From Insurer

The plaintiff brought an action against an insurer to recover the amount of an unsatisfied judgment against the insured. The court limited the plaintiff’s recovery to $25,000, explaining that the plaintiff was not entitled to recover against the insurer accrued prejudgment interest awarded as part of the underlying judgment, as the terms of the insurance policy (which met Insurance Department rules) limited the insurer’s liability to $25,000, including prejudgment interest. The court added that the plaintiff was not entitled to recover interest that had accrued since the entry of the underlying judgment because the policy conditioned the insurer’s obligation to pay on it having defended against the underlying action, which it had not done. [Alejandro v. Liberty Mut. Ins. Co., 2011 N.Y. Slip Op. 04398 (2d Dep’t May 24, 2011).]

Insureds’ Good Faith Belief In Nonliability May Excuse Late Notice

After a subcontractor’s employee allegedly was injured on the job, he sued the property owner and the construction project’s general contractor. They argued that their late notice to their insurance company should be excused because they had a “reasonable, good faith belief in nonliability.” They contended that the subcontractor had stated that its employee was fine and had returned to work, had provided proof prior to beginning work of its own liability and worker’s compensation insurance, and had entered into a “hold-harmless” agreement with the general contractor. They added that they had not supervised or controlled the work done by the subcontractor’s employees, and that their businesses were small and their principals lacked experience with construction site injuries. The court denied summary judgment because of an issue of fact as to their belief in their nonliability. [25th Ave., LLC v. Delos Ins. Co., 2011 N.Y. Slip Op. 03833 (2d Dep’t May 3, 2011).]

Patient’s Failure To Attend IMEs Dooms Provider’s No Fault Claim Against Insurer

A healthcare provider that had accepted an assignment of its patient’s claims against the patient’s no fault insurance company has had its lawsuit against the insurer dismissed. The court explained that the insurer had established that it had timely mailed requests that the patient attend independent medical examinations (“IMEs”) but that the patient had failed to appear. Because an assignor’s appearance at an IME “is a condition precedent to the insurer’s liability on the policy,” the insurer had properly denied the healthcare provider’s claim, the court concluded. [All Borough Group Med. Supply, Inc. v. Utica Mut. Ins. Co., 2011 N.Y. Slip Op. 50949(U) (2d Dep’t May 23, 2011).]

Tort Case Yielding More Than $100,000 SUM Coverage Limit Bars Insured’s SUM Claim

A pedestrian struck by a motor vehicle notified her automobile insurer of her intent to pursue a claim under her supplementary uninsured/underinsured motorist coverage. The Appellate Division, Second Department, held that because the pedestrian had received in excess of her SUM limit “from or on behalf of all persons that may be legally liable for the bodily injury sustained by the insured,” no further recovery was possible. [Matter of Liberty Mut. Ins. Co. v. Walker, 2011 N.Y. Slip Op. 04054 (2d Dep’t May 10, 2011).]

Reprinted with permission.  All rights reserved.

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