New York Insurance Coverage Law Update

Appellate Court Finds No Coverage for Post-Fire Asbestos Remediation Costs

After a fire damaged a building owned by Conley & Tibbitts Properties, LLC, a survey found asbestos, which New York required Conley to remediate. Conley’s insurer denied coverage for the asbestos removal, and Conley sued. The court upheld the disclaimer, reasoning that the policy excluded coverage for increased costs caused by the enforcement of a state code, notwithstanding any “other concurrent or subsequent contributing cause or event.” [Conley & Tibbitts Props., LLC v. Leatherstocking Coop. Ins. Co., 2013 N.Y. Slip Op. 06206 (App. Div. 4th Dep’t Sept. 27, 2013).]

Wrongful Death Claims Barred by Policy Exclusion for Liability for Bodily Injuries Sustained by Insured

Randall and Margaret Courtney died when their farm tractor, operated by Mr. Courtney, flipped over in a wooded area on their property. The administrators of Ms. Courtney’s estate sued the administrator of Mr. Courtney’s estate, who tendered the defense to the Courtneys’ homeowners insurer. The insurer disclaimed, maintaining that the policy excluded coverage for liability for bodily injuries sustained by a named insured, Ms. Courtney. The administrators of her estate countered that the exclusion did not apply to their wrongful death claim, which constituted an independent injury directly sustained by the decedent’s distributees. The court rejected that argument. It ruled that the wrongful death claim was barred by the policy’s exclusion for liability for bodily injuries sustained by an insured, reasoning that the wrongful death claim stemmed solely from the bodily injury to an insured, which the policy defined to include death. [Matter of Estate of Courtney v. Dryden Mut. Ins. Co., 2013 N.Y. Slip Op. 23322 (Sup. Ct. Cortland Co. Sept. 24, 2013).]

No Coverage for Actions Filed after Camp Counselor’s Off-Site Accident 

A camp counselor and five campers that the counselor was driving in her car to a site outside the camp were involved in an accident and killed. The camp’s insurer sought a judgment declaring that it had no duty to defend or to indemnify any person or entity in the resulting lawsuits. The court granted the insurer’s motion for summary judgment on several grounds. First, the court found that the policy’s auto exclusion precluded coverage because the underlying actions alleged bodily injury arising out of the use of any auto owned or operated by “any insured”.  The court explained that the counselor was an insured as defined by the camp’s policy because the underlying complaints alleged that she was an “employee,” and that the negligent supervision and entrustment claims against the camp necessarily fell with the scope of the exclusion. Second, the court held that the policy’s transportation exclusion precluded coverage, rejecting the camp’s argument that another exclusion in the policy rendered it ambiguous. The court stressed that “[e]xclusions in policies of insurance must be read seriatim, not cumulatively, and if any one exclusion applies there can be no coverage since no one exclusion can be regarded as inconsistent with another.”  Finally, the court upheld the policy’s limitation of coverage to bodily injury “arising out of … [t]he ownership, maintenance or use of the premises shown in the schedule and operations necessary or incidental to those premises,” reasoning that the “plain language of the premises limitation clearly limits coverage to the camp’s premises,” thereby precluding any duty to defend or to indemnify any person or entity in connection with claims arising out of the off-site accident. [Tudor Ins. Co. v. Golovunin, 2013 U.S. Dist. Lexis 140186 (E.D.N.Y. Sept. 27, 2013).]

Late Notice Dooms Coverage for Pollution Liability Claims Asserted Against City 

The City of San Diego asked its insurer, Indian Harbor Insurance Company, to defend and to indemnify it against three pollution liability claims under a pollution and remediation legal liability policy with a New York choice-of-law provision. The insurance company disclaimed because the City had not given it notice of the claims “as soon as practicable.” The court upheld the disclaimer and held that New York’s common law no-prejudice rule applied because New York’s late notice prejudice statute only applies to policies issued in New York on or after January 17, 2009, and the policy was issued in California. [Indian Harbor Ins. Co. v. City of San Diego, 2013 U.S. Dist. Lexis 137873 (S.D.N.Y. Sept. 25, 2013).]