New York Insurance Coverage Law Update

October 31, 2015 | Insurance Coverage

Second Circuit Applies “Unfortunate Event Test” To Find That Incidents Amounted To Three Accidents

A dump box attached to a dump truck struck and damaged an overpass owned by the New York State Thruway Authority. After hitting the overpass, the dump box separated from the truck and landed in the right lane of the highway. Between 30 seconds and five minutes later, a vehicle struck the detached dump box. At some point between a few seconds and 20 minutes later, a second vehicle struck the same detached dump box. The district court determined that three accidents had occurred, and the insurer appealed to the U.S. Court of Appeals for the Second Circuit. The circuit court applied the “unfortunate event test” and held that three separate accidents had occurred for purposes of the insurance policy limits. It reasoned that the damage to the overpass was not temporally or spatially proximate to the first vehicle’s collision with the dump box, and that the events were part of distinct causal chains. The circuit court concluded that the second and third incidents were also distinct accidents, both because the second incident did not play a role in causing the third incident and because the relative timing between the two incidents played no role in the third incident’s occurrence. [National Liberty & Fire Ins. Co. v. Itzkowitz, No. 14-cv-3651 (2d Cir. Sept. 22, 2015).]

Insurer Must Prove Its IME Notices Were Timely, Divided Appellate Court Decides

An insurer moved for summary judgment, seeking a declaration that it properly denied a health care provider’s no-fault claim because the provider’s assignor failed to appear for independent medical exam-inations (“IMEs”). The insurer moved for summary judgment, but the trial court denied its motion. A divided Appellate Division, First Department, found that the insurer had established that the notices of the scheduled IMEs had been properly mailed and that the provider’s assignor had not appeared, but that the insurer had not established that the notices complied with New York insurance regulations that prescribe a 30-calendar-day time frame for the holding of IMEs. The majority concluded that the insurer was “required to submit proof” that its notices were timely to make a prima facie showing that it was entitled to summary judgment. The dissent said that there was no authority for that requirement. [American Tr. Ins. Co. v. Longevity Med. Supply, Inc., 2015 N.Y. Slip Op. 06761 (1st Dep’t Sept. 15, 2015).]

New York Appellate Court Rules That Pennsylvania Law Applied To Auto Policy Issued In Pennsylvania For New York Accident

A health care provider sued an insurance company in New York state court to recover assigned first-party no-fault benefits.  The insurer moved for summary judgment, maintaining that the automobile insurance policy, which had been issued to the provider’s assignor in Pennsylvania, had been retroactively rescinded under Pennsylvania law due to material mis-representations that the insured made on his application regarding his residence. The trial court denied the insurer’s motion, and the insurer appealed. The appellate court reversed, reasoning that the insurer had issued the policy in Pennsylvania to a Pennsylvania resident who garaged his vehicle in Pennsylvania.  Because the only
connection to New York was the accident, the court found that Pennsylvania law applied and that the policy had been properly rescinded under Pennsylvania law. [Delta Diagnostic Radiology, P.C. v. Infinity Group, 2015 N.Y. Slip Op. 25304 (App. Term, 2d Dep’t Sept. 2, 2015).]

Insured Materially Breached Policy’s Cooperation Provision By Failing To Comply With EUO Requirement, Second Circuit Holds

After fire destroyed the insured’s apartment building, the insured made a claim for coverage. The insurer invoked the policy’s “examinations under oath” (“EUO”) require-ment and asked to examine the insured’s employees about the claimed loss. The insured chose not to submit to the EUOs. The federal district court granted the insurer’s motion for summary judgment, finding that the insured had materially breached the policy’s cooperation provision by failing to comply with the EUO requirement, and the insured appealed to the U.S. Court of Appeals for the Second Circuit. The circuit court affirmed, explaining that, under New York law, an insured’s “willful failure to appear at an EUO” constituted a “material breach of the cooperation clause and a defense to an action on the policy.” The circuit court concluded that the insured’s repeated failure to respond to the insurer’s requests for EUOs – with the knowledge of later repercussions for its failure to do so – demonstrated as a matter of law that the breach was willful. [Wingates, LLC v. Commonwealth Ins. Co. of America, No. 14-2119-cv (2d Cir. Sept. 29, 2015).]

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