New York Insurance Coverage Law Update

November 1, 2011 | Insurance Coverage

Insurer Estopped From Denying Excess Coverage

The general contractor and owner of a construction site sought coverage under an excess insurance policy issued to their subcontractor with respect to an underlying personal injury action. The excess insurer acknowledged coverage and participated in the defense. After partial summary judgment was awarded in favor of the plaintiffs in the underlying action, the excess insurer disclaimed coverage, asserting that its policy follows form to the primary policy, which did not provide additional insured coverage, and that the certificate of insurance that named the general contractor and owner as additional insureds was false. The court found that there was no evidence that the general contractor or owner had acted in bad faith, and that nothing had prevented the insurer from obtaining a copy of the primary policy during the three years following the tender. It then ruled that the excess insurer was estopped from denying excess coverage. [Yoda, LLC v. National Union Fire Ins. Co. of Pittsburgh, PA, 2011 N.Y. Slip Op. 07174 (1st Dep’t Oct. 13, 2011).]

Insurer Found Liable for Bad Faith; Court Awards Plaintiff $2.25 Million

After a person injured in a three car automobile accident in Manhattan obtained a $2.25 million judgment
against a taxi driver and was assigned the taxi driver’s claim against his insurer, the injured person sued the insurer, arguing that it had acted in bad faith by failing to settle the action within the $200,000 policy limits. The court found that the insurer was estopped from denying that the taxi driver was not its insured, noting that the insurer had defended the taxi driver for nine years. It also decided that the insurer’s “pattern of behavior” had demonstrated a “conscious or knowing indifference to the rights of its insured.” The court granted judgment against the insurer and in favor of the injured person for $2.25 million, plus interest. [Taveras v. American Tr. Ins. Co., 2011 N.Y. Slip Op. 51831(U) (Sup. Ct. Kings Co. Oct. 17, 2011).]

No Uninsured/Underinsured Motorist Coverage Where Box Fell Off Truck, Injuring Motorcyclist

A cardboard box fell off an unidentified truck, injuring people on a motorcycle, who then sought uninsured-underinsured motorist coverage. The court found that the box was not an “integral part” of the pickup truck and, therefore, the motorcycle’s collision with the box did not constitute the type of “physical contact” needed to impose UM coverage. [Matter of State Farm Mut. Auto. Ins. Co. v. Beddini, 2011 N.Y. Slip Op. 07190 (1st Dep’t Oct. 13, 2011).]

Arbitration Proceeding To Which Healthcare Provider Was Not A Party Did Not Bar It From Suing No-Fault Insurer

When a healthcare provider sued an insurer to recover assigned first-party no-fault benefits, the insurer argued that the provider was precluded from litigating its entitlement to benefits because a prior claim by another provider involving the provider’s assignor arising out of the same accident had already been denied in an arbitration proceeding. A divided Appellate Term rejected the insurer’s argument, explaining that because there was no showing of privity between the two providers, suit against the insurer was not barred. [Jamaica Med. Supply, Inc. v. N.Y. Central Mut. Fire Ins. Co., 2011 N.Y. Slip Op. 21359 (2d Dep’t, App. Term, Oct. 11, 2011).]

Homeowners’ § 349 Claim Is Dismissed Where Dispute With Insurer Was “Wholly Private”

After a fire, the homeowners submitted a claim to their insurer. One year later, the insurer denied the claim on the grounds that the homeowners had failed to cooperate with its investigation and that they had set the fire or caused it to be set. The homeowners sued the insurer, arguing that it had violated N.Y. General Business Law § 349. The court granted the insurer’s motion to dismiss that claim, finding that the parties’ dispute was “wholly private” and therefore did not implicate § 349. [Laskowski v. Liberty Mut. Fire Ins. Co., No. 5:11-cv-340 (GLS/ATB) (N.D.N.Y. Oct. 19, 2011).] 

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