New York Insurance Coverage Law Update

April 1, 2013 | Insurance Coverage

 No Coverage Where No Written Agreement To Name City As Additional Insured

Harleysville issued general liability insurance policies to Bruno Grgas, Inc. and to Coastal Sheet Metal Corp., providing additional insured coverage where the insured and the organization seeking additional insured coverage agreed in writing that the insured add the organization as an additional insured.  The Appellate Division, First Department, held that the City of New York was not entitled to coverage as an additional insured for the underlying personal injury action because there was no written agreement between the City and either Bruno or Coastal. The court opined that the language in Bruno and Coastal’s subcontracts, which incorporated by reference the terms of a prime contract that required additional insured coverage for the City, was “insufficient.” [City of New York v. Nova Cas. Co., 2013 N.Y. Slip Op. 01355 (App. Div. 1st Dep’t March 5, 2013).]

 “Advertising Injury” Allegations Gave Rise to Primary CGL Insurer’s Duty to Defend

Sebastian International sued Quality King Distributors alleging that it had illegally diverted, decoded and sold Sebastian products to pharmacies; distributed and sold counterfeit Sebastian products; and distributed and sold materials that infringed upon Sebastian’s copyrights and trade-marks. Sebastian also alleged that Quality King sold diverted Sebastian products to consumers over the internet. Quality King’s umbrella insurer, National Union, sought a declaration that it was not obligated to defend and indemnify Quality King.  The court granted National Union’s motion for summary judgment, finding that Quality King first had to look to its primary commercial general liability policies issued by Continental Casualty Company, that provided coverage for advertising injury arising out of the “use of another’s advertising idea in your advertisement” or from the infringement of “another’s copyright, trade dress or slogan,” before it could seek coverage under National Union’s umbrella policy, and that the Continental Casualty policy had not yet been exhausted. [Continental Cas. Co. v. Quality King Distribs., Inc., 2013 N.Y. Slip Op. 50346(U) (Sup. Ct. N.Y. Co. March 1, 2013).]

Whether Life Insurance Beneficiaries Forfeited Proceeds By Murdering Insured To Be Determined At Trial

After two insurers were sued for the proceeds of two life insurance policies, they asserted that the policies had been obtained based upon a scheme to murder the deceased and/or that the deceased made false representations in applying for the policies. The court found that the issue of whether the primary beneficiaries had murdered the deceased and thus had forfeited their rights to the insurance proceeds had to be determined at trial. [Ganelina v. Public Adm’r, N.Y. Co., 2013 N.Y. Slip Op. 23094 (Sup. Ct. N.Y. Co. March 28, 2013).]

Damage To Insured’s Work Is Not An “Occurrence,” Court Rules

After Rosewood Home Builders built a house for Wilfred Burgett, Burgett sued Rosewood and obtained an award of damages stemming from the faulty construction of the house. Rosewood’s insurer asserted that Burgett’s damages were not covered by the policy it had issued to Rosewood.  A federal district court in New York agreed with the insurer, finding that the property damage to the house was not caused by an “occurrence,” because it was damage to the insured’s work product, not a third person or property. [Rosewood Home Builders, LLC v. National Fire & Marine Ins. Co., 2013 U.S. Dist. Lexis 45374 (N.D.N.Y. March 29, 2013).]

New York Court Holds That Illinois Law Applies To Reinsurance Dispute And, Therefore, Reinsurer Did Not Have To Prove That It Had Been Prejudiced By Late Notice Of Claim

Decades after an insurer purchased nine certificates of facultative reinsurance, it notified the reinsurer of a claim, which the reinsurer denied. The insurer filed suit in a federal district court in New York.  The court found that Illinois law applied to the certificates because they had been entered into in Illinois and the expected place of the reinsurer’s performance was Illinois. The court then ruled that the reinsurer could refuse coverage under the certificates, concluding that the insurer’s notice had been unreasonably late and that Illinois law did not require that the reinsurer prove that it had been prejudiced by the late notice of claim. [AIU Ins. Co. v. TIG Ins. Co., 2013 U.S. Dist. Lexis 41716 (S.D.N.Y. March 25, 2013).]

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