New York Insurance Coverage Law Update

No Coverage For Crane Damaged By Superstorm Sandy, New York Appellate Court Rules

A 750-foot tall tower crane affixed to a 74-story mixed-use hotel and residential building under construction in Manhattan was dislodged and partially destroyed by Superstorm Sandy. The project’s owner and construction manager sued the insurers that had issued a $700 million builder’s risk policy. The court held that there was no coverage. It reasoned that the property covered under the policy included “Temporary Works,” defined to include structures that were “incidental” to the project.” The court found that the crane was “integral” to, and not “incidental” to, the project and, therefore, did not fall within the definition.  The court concluded that even if the crane fell within the definition of “Temporary Works,” the contractor’s tools, machinery, plant, and equipment exclusion would apply to preclude coverage. [Lend Lease (US) Constr. LMB Inc. v. Zurich Am. Ins. Co., 2015 N.Y. Slip Op. 09389 (1st Dep’t Dec. 22, 2015).]

Assault And Battery Exclusion Precluded Coverage For Claim That Intoxicated Patron Assaulted Another Customer

A patron sued a restaurant, alleging that she had been injured as a result of an altercation with another patron who was intoxicated. The injured patron alleged the restaurant knowingly served an intoxicated person, violated the Dram Shop Act, and negligently supervised its staff.  The restaurant’s insurer disclaimed coverage, relying on the assault and battery exclusion endorsement in the restaurant’s policy.  The court agreed with the insurer that coverage was precluded by the exclusion, reasoning that all of the claims asserted in the personal injury action arose out of the assault and/or battery and, therefore, fell within the exclusion. [Amato v. National Specialty Ins. Co., 2015 N.Y. Slip Op. 09392 (2d Dep’t Dec. 23, 2015).]

Landlords’ Coverage As Additional Insureds Deemed Primary To Landlords’ Own Coverage

Landlords were named insureds under a policy issued by Tower Insurance Company of New York and additional insureds under a policy issued by another insurer to the ground-floor tenant. The tenant’s policy provided additional insured coverage to the landlords for “liability arising out of the ownership, maintenance or use of that part of the premises leased” to the tenant.   After the landlords were sued over an alleged defect in the sidewalk outside the demised premises, Tower contended that the additional insured coverage was primary.  The court agreed, stating that the landlords were covered as additional insureds for “accidents occurring outside the demised premises.”  The court concluded that the “Other Insurance” clause in Tower’s policy stated that it was excess over another policy providing primary coverage to its named insured as an additional insured, and that the other insurer provided such coverage.  [Tower Ins. Co. of N.Y. v. Leading Ins. Group Ins. Co., Ltd., 2015 N.Y. Slip Op. 09208 (1st Dep’t Dec. 15, 2015).]

No Coverage Where Underlying Complaint Alleged That Insured Had Failed To Complete Its Contractual Duties

610 West Realty LLC, the sponsor of a condominium project, sued A-1 Testing Laboratories, a subcontractor, alleging that A-1 had failed to detect that another contractor’s work was defective. A-1’s insurer asserted that the underlying action was not covered by A-1’s policy. The court agreed, stating that there was “no doubt” that 610 West’s allegations fell within the “no occurrence, no coverage” rule for commercial general liability policies under New York law. The court found that the allegations related exclusively to A-1’s alleged failure to complete its contractual duties and, therefore, did not stem from an occurrence and did not create a reasonable possibility of coverage. It concluded that New York law also was “clear” that recitation of a cause of action labeled “negligence” in an underlying complaint did “not suffice to create coverage for faulty work product.” [Maxum Indemnity Co. v. A One Testing Laboratories, Inc., No. 14-cv-4023 (KBF) (S.D.N.Y. Dec. 10, 2015).]

Insurers Did Not Have To Show Prejudice To Deny First Party Claim After Insureds Provided Late Notice

Nikolai and Harutyun Minasian asserted that their apartment was burglarized and jewelry was stolen. They filed a claim with their insurers 86 days after the alleged loss. The insurers denied coverage based upon the Minasians’ breach of the timely notice requirements in their policies, and the Minasians sued. The court granted the insurers’ motions for summary judgment. The court found that the 86-day delay was untimely as a matter of law and that the Minasians had no valid reason for the delay. The court rejected the Minasians’ argument that the insurers could not rely upon the delay to deny coverage because they had not been prejudiced, concluding that there was no authority in New York for the proposition that the lack of prejudice was a mitigating factor that could itself create or support an excuse for late notice. [Minasian v. IDS Property Cas. Ins. Co., No. 14-cv-10125 (KBF) (S.D.N.Y. Dec. 9, 2015).]