New York Insurance Coverage Law Update

Exclusion Did Not Bar Coverage For Wrongful Death Claim By Noninsured Father Following Daughter’s Death

A girl drowned at her grandparents’ home, where she lived. The girl’s father, who did not live with the grandparents, obtained a wrongful death judgment and filed a direct action against the grandparents’ homeowner’s insurer. The Court of Appeals explained that the wrongful death claim was based upon the father’s “own loss” and was not derivative of any claim of his insured daughter. Therefore, the Court concluded, the policy’s exclusion for bodily injury to an insured where an insured would receive “any benefit” under the policy did not bar coverage for the wrongful death claim. [Cragg v. Allstate Indem. Corp., 2011 N.Y. Slip Op. 04767 (Ct. App. June 9, 2011).]

Affidavit of Insurer’s Investigator Suggesting Accident Was Staged Blocks Provider’s Summary Judgment Motion

A provider sought to recover assigned first-party no-fault benefits for supplies it provided to its assignor. The insurer argued that there was no coverage because the accident was staged, but the trial court entered judgment in the provider’s favor. The Appellate Term ruled that an affidavit of the insurer’s investigator was “sufficient to demonstrate a founded belief that the alleged injuries did not arise out of an insured incident.” The provider’s summary judgment motion, therefore, should have been denied. [Jesa Med. Supply, Inc. v. Republic W. Ins. Co., 2011 N.Y. Slip Op. 51127(U) (App. Term 2d Dep’t June 15, 2011).]

Law Firm Entitled To Defense In Bank’s Action Stemming From Counterfeit Check Given By Impostor Client

A law firm was contacted by someone purporting to be the CEO of a Taiwanese corporation seeking legal assistance in collecting debts in North America. After the individual sent the firm a signed retainer agreement, the firm received a $384,700 check from a purported debtor of the corporation. The firm deposited the check and, at the request of the purported CEO, instructed the bank to wire the value of the check, minus a legal fee, to a third party in South Korea, who allegedly was one of the corporation’s suppliers. After the funds were transferred, the bank notified the firm that the check was counterfeit. The bank sued the firm, which sought a defense from its professional liability insurer. The court explained that the policy required that the firm “render Legal Services for others.” The Appellate Division, Third Department, concluded that the claim for damages related to the overdraft were “based on” the firm’s acts in rendering legal services to others, and that the insurer therefore had a duty to defend the firm in the bank’s action. [Lombardi, Walsh, Wakeman, Harrison, Amodeo & Davenport, P.C. v. American Guar. & Liab. Ins. Co., 2011 N.Y. Slip Op. 04589 (3d Dep’t June 2, 2011).]

Volunteer Firefighter Hurt Driving To Emergency Is Not Entitled To SUM Benefits Under Department’s CGL Policy

A volunteer firefighter driving to an emergency was injured when his car was struck by another vehicle. He settled with the vehicle’s owners and sought supplemental underinsured motorist (“SUM”) coverage under the fire department’s liability policy. The Appellate Division, Second Department, found that the firefighter was not an “insured” as defined by the SUM endorsement that stated: “You, as the named insured and, while residents of the same household, your spouse and the relatives of either you or your spouse.” The court explained that “You” referred to the fire department, which cannot have a spouse or relative. The firefighter also was not covered as a person in a vehicle insured for SUM benefits under the policy, because his car was not an insured auto. [Matter of American Alternative Ins. Corp. v. Pelszynski, 2011 N.Y. Slip Op. 05692 (2d Dep’t June 28, 2011).]

Insured’s Delay In Notifying Insurer About Alleged Dog Bite Dooms Coverage Claim

After the insured’s dog allegedly bit a jogger on October 31, 2006, the insured saw blood on the jogger’s hand. Within 48 hours, the Health Department requested the dog’s vaccination records. More than six months later, the jogger sued the insured; the next day, the insured notified his insurer about the incident for the first time. The court found that the insured’s notice was not timely, and that the insured did not have a reasonable or good faith belief in nonliability because he knew that his dog allegedly had bitten the jogger and that he might have been injured; that a complaint had been made about the incident (even if he may not have known the jogger’s identity at that time); and that there was at least one substantiated incident involving his dog prior to that incident. [Zimmerman v. Peerless Ins. Co., 2011 N.Y. Slip Op. 05491 (2d Dep’t June 21, 2011).] 

Reprinted with permission.  All rights reserved.