New York Insurance Coverage Law Update

Verdict in Negligence Suit Did Not Preclude Application of Intended Bodily Injury Exclusion in Coverage Case

After his car was struck by a vehicle driven by Edmund Schwartz, Walter Dreyer allegedly intentionally drove his vehicle into Schwartz. Schwartz sued Dreyer, asserting negligence and intentional tort causes of action. Only the negligence claim was submitted to the jury, and a judgment was entered against Dreyer. Dreyer argued that his insurer was obligated to indemnify him. The court found that the insurer had raised a triable issue of fact as to whether the claim fell within the exclusion for “intentional” bodily injury and that the jury’s negligence verdict did not preclude application of the exclusion. [Dreyer v. New York Central Mut. Fire Ins. Co., 2013 N.Y. Slip Op. 03056 (App. Div. 2d Dep’t May 1, 2013).]

Underlying Plaintiffs’ Failure to Act Diligently to Ascertain Insurer’s Identity Bars Their Claim

Underlying plaintiffs sued the owner of an apartment building where they were allegedly burned by hot water while bathing.  The court upheld the late notice disclaimer of the building owner’s insurer. Although the underlying plaintiffs’ counsel requested that the owner notify its liability insurer, the court found that the insured never notified the insurer and the underlying plaintiffs did not act diligently in attempting to ascertain the identity of the owner’s insurer. [Castlepoint Ins. Co. v. Anlovi Corp., 2013 N.Y. Slip Op. 30792(U) (Sup. Ct. N.Y. Co. Apr. 16, 2013).]

Claims Against Lawyer Were Not All Related for Purposes of His Malpractice Policy

A lawyer was sued for malpractice by clients who alleged that they were defrauded by financial advisors to whom they had been referred by the lawyer.  The court found “substantial differences” between the alleged victims, including the amounts of their claims and the fact that the financial advisor who allegedly committed the fraud was not the same in each case, and ruled that they were not the “same and/or related” for purposes of triggering the lawyer’s “claims-made” professional liability policy. [American Guar. & Liab. Ins. Co. v. Chicago Ins. Co., 2013 N.Y. Slip Op. 02845 (App. Div. 1st Dep’t Apr. 25, 2013).

Mortgagees No Longer Have Insurable Interest in Property After Satisfaction of Mortgage 

The plaintiffs retained a purchase money mortgage after they sold property to Irving Development Corp. Irving obtained insurance for the property, naming the plaintiffs as mortgagees. Irving defaulted on the mortgage and executed a deed in lieu of foreclosure transferring the property to a company owned by plaintiffs, and the plaintiffs executed a release. The plaintiffs asserted that they then discovered that the property had suffered water damage. The court ruled that as a result of the satisfaction of the mortgage debt, the plaintiffs lacked any insurable interest in the property and could not recover under the policy’s mortgagee loss payable clause. [Burke v. State Farm Fire & Cas. Co., 2013 N.Y. Slip Op. 02367 (App. Div. 2d Dep’t Apr. 10, 2013).]

Section 3420(d) Deemed Inapplicable to Insurer’s Claim for Past Defense Costs 

A garage employee parking a vehicle allegedly ran over someone who sued the garage and its employee.  The garage’s insurer placed the vehicle owner’s insurer on notice, and the vehicle owner’s insurer disclaimed 15 months later based upon various exclusions.  The Appellate Division, First Department, held that the disclaimer was untimely and, thus, ineffective as to the garage and its employee’s claim for defense and indemnity.  However, the disclaimer was upheld as to the garage insurer’s claim for past defense costs.  [Greater N.Y. Mut. Ins. Co. v. Chubb Indem. Ins. Co., 2013 N.Y. Slip Op. 02496 (App. Div. 1st Dep’t Apr. 16, 2013).]

Policy Was Delivered When Broker Received It from Insurer, Court Rules 

A policy was “delivered” when a wholesale broker who was the agent of the insured received it from the insurer. Because that occurred before January 17, 2009, when the prejudice requirement set forth by N.Y. Ins. L. § 3420(a) became law, the untimely notice provided by the insured precluded recovery under the policy. [B&A Demolition and Removal, Inc. v. Markel Ins. Co., 2013 U.S. Dist. Lexis 55946 (E.D.N.Y. Apr. 18, 2013).]