New York Insurance Coverage Law Update

Second Circuit Opines That Limitations Period Begins To Run When Insureds’ Claim Against Homeowner’s Insurer Accrues

The insureds filed a claim with their homeowner’s insurer after their house began to collapse. The insurer denied coverage, and the insureds sued. The insurer maintained that the limitations period had expired, relying upon a policy provision that required suit to be commenced within two years “after the date of loss.” A federal court agreed, and dismissed the suit. The United States Court of Appeals for the Second Circuit vacated that decision, opining that the contractual limitations period did not begin to run until the insureds’ claim against their insurer had accrued. It then remanded the case for the district court to consider when the insureds’ claim had accrued. [Fabozzi v. Lexington Ins. Co., 2010 U.S. App. Lexis 7040 (2d Cir. Apr. 6, 2010).]

Court Upholds Denial Of Coverage For Donor-Egg Procedures

The insureds brought suit against their healthcare insurer for insurance coverage for donor-egg procedures. The court found that the insurer had reasonably interpreted the policy term “medically necessary” to extend coverage to only those “members . . . for whom fertility would be naturally expected,” because aging was “not an illness.” Finding support in both medical literature and the insurer’s consulting physicians’ opinions, the court granted summary judgment in favor of the insurer. [Doe v. Blue Cross Blue Shield of Massachusetts, Inc., 2010 U.S. Dist. Lexis 37153 (S.D.N.Y. Apr. 12, 2010).]

Court Finds Factual Questions As To Whether Plaintiffs Had Falsely Represented They Would Occupy House Later Damaged By Fire

The insureds’ home was damaged by fire weeks after they took title. The insurer disclaimed coverage, asserting that the insureds had falsely represented that they would occupy the property. The court acknowledged that the insureds had not yet moved into the house when the fire had occurred, but noted that they testified that they had intended to do so within 120 days of taking title. It added that the insureds had electric and telephone service activated in the house prior to the fire and that their aunt, while living in a trailer on the property, had used the facilities. This evidence, the court concluded, created questions of fact as to whether the insureds had made any material misrepresentations in their insurance application. [Jeune v. Peerless Ins. Co., 2010 N.Y. Slip Op. 03516 (3d Dep’t Apr. 29, 2010).]

No Coverage For Alleged Fall At Property Not Listed As A “Designated Premises”

An individual allegedly injured at a site in Nassau County brought suit against Richner Communications, Inc. After Richner’s insurer disclaimed on the ground that the Nassau property was not covered under the policy, Richner brought suit. The Supreme Court, Queens County, denied the insurer’s summary judgment motion, and the insurer appealed. The Appellate Division, Second Department, reversed. The appellate court explained that the policy contained an endorsement that expressly limited coverage to certain “Designated Premises,” and that, at the time of the alleged accident, the Nassau property was not listed. Given the endorsement, the appellate court rejected Richner’s contention that the policy was ambiguous because it stated that it applied to bodily injury caused by an occurrence that took place in the “coverage territory.” [Richner Communications, Inc. v. Tower Ins. Co. of N.Y., 2010 N.Y. Slip Op. 02939 (2d Dep’t Apr. 6, 2010).]

Appellate Court Rejects Bad Faith, Fraud, Breach Of Contract, And Punitive Damages Claims

The insured brought suit against her insurer after it denied her claim for property damage to her home. After the Supreme Court, Erie County, denied the insurer’s motion to dismiss a variety of claims, the insurer appealed. The Appellate Division, Fourth Department, ruled that the causes of action for the insurer’s alleged bad faith in refusing to settle the claim should have been dismissed because they did not allege conduct constituting “gross disregard of the insured’s interests.” The Fourth Department also ruled that the causes of action for fraud should have been dismissed because they merely restated the cause of action for breach of contract. In addition, the appellate court held that the cause of action for violation of General Business Law § 349 should have been dismissed inasmuch as this was a private contractual dispute, “unique to the parties,” and § 349 “was not intended to supplant an action to recover damages for breach of contract between parties to an arm’s length contract.” Finally, it concluded, the punitive damages claim should have been dismissed given that there was no indication that the insurer’s alleged conduct had been “activated by evil or reprehensible motives.” [Cooper v. New York Cent. Mut. Fire Ins. Co., 2010 N.Y. Slip Op. 03578 (4th Dep’t Apr. 30, 2010).]

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