New York Insurance Coverage Law Update

January 1, 2015 | Insurance Coverage

Failure of Healthcare Providers’ Assignors To Appear At Scheduled EUOs Dooms Their Claim For No-Fault Benefits

Healthcare providers’ assignors failed to appear at examinations under oath (“EUOs”) scheduled by the no-fault insurer.  The insurer asked the court to declare that the providers were not entitled to receive       no-fault benefits. The court cited to precedent holding that the failure to   submit to a requested independent medical examination is a breach of a condition precedent to coverage under the no-fault provisions of an auto policy. That reasoning, the court ruled, also applied to a failure to appear at EUOs. As a result, the court concluded, the providers were not entitled to payment. [Allstate Ins. Co. v. Pierre, 2014 N.Y. Slip Op. 08921 (2d Dep’t Dec. 23, 2014).]

Abuse/Molestation Endorsement Did Not Cover Claim That Student Assaulted Another Student On School Bus

A lawsuit against a school bus company alleged that a student on a bus was the victim of a sexual assault by another student because of inadequate supervision by the company’s employee. The company sought coverage for the lawsuit pursuant to an “Abuse or Molestation Liability” endorse-ment in its insurance policy. The court noted that the endorsement limited coverage to acts by “employees” or “volunteer workers.” It then ruled that because, as alleged, the incident was perpetrated by a student, the company failed to establish that its insurer was obligated to defend and to indemnify it in the underlying action. [Logan Bus Co., Inc. v. Discover Prop. & Cas. Ins. Co., 2014 N.Y. Slip Op. 08610 (2d Dep’t Dec. 10, 2014).]

Limitations In UM Endorsement In Ohio Policy Found Unenforceable In New York 

A man driving a car in New York that was owned by his sister, who lived in Ohio, was involved in a motor vehicle accident. He sought uninsured motorist (“UM”) benefits under his sister’s Ohio policy. The insurer disclaimed coverage, contending that the policy excluded from the definition of an insured any person who had UM coverage under another vehicle’s policy, as he had. After litigation ensued, the New York court determined that the exclusion was invalid   in New York because under New York law every automobile insurance policy must contain a UM endorsement and the law does not mention any exclusions. Given that the exclusion was invalid, the court concluded that the policy had to afford coverage to the man “up to its full limits.” [Matter of Government Employees Ins. Co. v. Johnson, 2014 N.Y. Slip Op. 08433 (2d Dep’t Dec. 3, 2014).]

Appellate Court Reinstates GBL §349 Claim Against Insurer For Allegedly Failing To Directly Notify Homeowners Of Policy Change 

The plaintiffs sued their homeowners insurer for alleged “deceptive business practices” under New York General Business Law (“GBL”) § 349.  The insurer allegedly obtained permission from New York insurance regulators to reduce coverage by eliminating a “replacement cost” endorse-ment in its homeowners insurance policies and sent an advisory notice regarding the change to the plaintiffs’ insurance broker, but did not send notice directly to the plaintiffs as required by New York Insurance Law § 3425(d). The plaintiffs asserted that they learned that this material term of their policy had changed only after a fire at their home. After the trial court dismissed plaintiffs’ GBL §349 claim, the plaintiffs appealed, and the appellate court reversed. The appellate court opined that the insurer was not entitled to dismissal of the GBL §349 claim as a matter of law and sent the case back to the trial court for further proceedings. [Valentine v. Quincy Mut. Fire Ins. Co., 2014 N.Y. Slip Op. 08984 (2d Dep’t Dec. 24, 2014).]

Property Owners Could Not Recover For Damage To Their Property Under Subcontractor’s Policy

Property owners sought insurance coverage for alleged damage to their premises as additional insureds under the allegedly responsible subcontractor’s commercial general liability insurance policy. The court rejected the owners’ claim, explaining that the liability policy did not provide first-party coverage for damage to the insureds’ own property and that a direct action against an alleged tortfeasor’s insurer is not permitted absent an unsatisfied judgment against the tortfeasor. [Vineyard Sky, LLC v. Ian Banks, Inc., 2014 N.Y. Slip Op. 08503 (1st Dep’t Dec. 4, 2014).]

Suit Seeking UM Benefits Dismissed Where Policy Provided That Disputes Were Subject To Mandatory Arbitration 

Plaintiffs sued to recover damages for breach of an insurance contract, alleging that they had submitted a valid claim for uninsured motorist (“UM”) benefits to the insurer, and the insurer had refused to pay the claim. The court dismissed plaintiffs’ complaint because the policy provided for mandatory arbitration of a dispute with respect to the amount owing under either the policy’s UM or supplementary un-insured/underinsured benefits provisions.  [Serrano v. Progressive Ins. Cos., 2014 N.Y. Slip Op. 08975 (2d Dep’t Dec. 24, 2014).]

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