New York Insurance Coverage Law Update

Corning sought coverage for thousands of claims arising from the distribution and/or manufacture of two asbestos-containing products. The court said the insurers failed to make out a prima facie case that each of the thousands of claims constituted a separate occurrence. The court reasoned that claims arising from exposure to an asbestos condition at a common location, at approximately the same time, may be found to have arisen from the same occurrence. [Mt. McKinley Ins. Co. v. Corning Inc., 2012 N.Y. Slip Op. 04398 (App. Div. 1st Dep’t June 7, 2012).]

Insurer Can Rely On Named Insured’s Alleged Misrepresentations To Reform Or Rescind Policy with Respect To Additional Insureds

A tower crane collapsed during construction of a luxury high-rise condominium in Manhattan. New York’s highest court held that the insurer could rely upon alleged misrepresentations by the named insured contractor in its underwriting submission to reform or rescind the policy with respect to the additional insureds. [Admiral Ins. Co. v. Joy Contrs., Inc., 2012 N.Y. Slip Op. 04670 (N.Y. June 12, 2012).]

Damaged Laundromat Equipment Not Insured As Part Of The Building

Laundromat equipment damaged in a building fire was not insured as part of the building even though it was hard-wired into the building’s utility systems. The court reasoned that the equipment was property used by the insured, which owned the Laundromat and the building, solely in the Laundromat’s business. [Amery Realty Co., Inc. v. Finger Lakes Fire & Cas. Co., 2012 N.Y. Slip Op. 04812 (App. Div. 3d Dep’t June 14, 2012).]

Asset Purchaser Coverage Found Under Seller’s Policies For Potential Pre-Sale Liabilities

The Appellate Division, First Department, has found that insurance policies transferred to corporations that purchased virtually all of the insured’s assets covered potential liabilities that arose before the transfer, even though lawsuits were filed against the purchasers after the sale. The court found that the insurers’ lack of consent to the policies’ transfer was “unimportant” because the risk did not increase.  [Arrowood Indem. Co. v. Atlantic Mut. Ins. Co., 2012 N.Y. Slip Op. 05262 (App. Div. 1st Dep’t June 28, 2012).]

Insured Loses SUM Coverage For Settling Without Insurer’s Permission

An insured injured in an automobile accident settled with the other motorist and car manufacturer without her insurer’s permission. The court held that the insured thereby vitiated her right to supplementary underinsured motorist coverage. [Day v. OneBeacon Ins., 2012 N.Y. Slip Op. 05281 (App. Div. 4th Dep’t June 29, 2012).]

Court Affirms TRO Requiring Insurer To Pay Insured’s Defense Costs In Criminal Action

The Appellate Division, First Department, has affirmed a temporary restraining order directing an insurer to pay the insured’s defense costs in a criminal action under a directors and officers liability policy. The court said that absent a final adjudication that the policy excluded the insured’s alleged wrongdoing, the insurer had to pay the defense costs under the policy, subject to recoupment. [Dupree v. Scottsdale Ins. Co., 2012 N.Y. Slip Op. 04839 (App. Div. 1st Dep’t June 14, 2012).]

“Employee Injury” Exclusion Barred Coverage For Subcontractor’s Employee’s Suit Against General Contractor

A general contractor who was sued by a subcontractor’s employee was not entitled to coverage under the subcontractor’s policy, which excluded coverage for lawsuits arising out of injuries to employees of “any insureds.” [Herrnsdorf v. Bernard Janowitz Constr. Corp., 2012 N.Y. Slip Op. 05144 (App. Div. 2d Dep’t June 27, 2012).]

Late Notice of Suit Dooms Coverage, Even Where Insurer Had Notice Of Accident

A person involved in an automobile accident obtained a default judgment against the insured. The court upheld the insurer’s disclaimer, explaining that although the insurer had notice soon after the accident, it had no notice of the filing of the lawsuit against the insured until after the judgment. [O’Garro v. State Farm Fire & Cas. Ins. Co., 2012 N.Y. Slip Op. 05153 (App. Div. 2d Dep’t June 27, 2012).]