New York Insurance Coverage Law Update

September 6, 2016 | Insurance Coverage

Insurer Need Not Indemnify Insured For Property Damage Attributable To Periods When Liability Insurance Was Unavailable

Keyspan Gas East Corporation brought a declaratory judgment action seeking indem-nification for the costs of environ-mental clean-up at two gas plants. The Appellate Division, First Department, deciding an issue of first impression in New York State appellate courts, held that the insurer is not obligated to indemnify Keyspan for property damage attributable to time periods when pollution liability insurance was unavailable in the marketplace and Keyspan could not have obtained such insurance even if it had wanted to do so. The First Department reasoned that none of the insurers’ policies required the insurer to cover property damage outside of the policy period. The appellate court rejected Keyspan’s argu-ment that such a risk should be transferred from policyholders to insurers, concluding that, in the absence of a contract requiring such action, spreading risk “should not by itself serve as a legal basis for providing free insurance to an insured.” [Keyspan Gas E. Corp. v. Munich Reins. Am., Inc., 2016 N.Y. Slip Op. 05945 (1st Dep’t Sept. 1, 2016).]

Insurer Demonstrated That It Had Not Insured Vehicle Involved In Accident

A health care provider sued an automobile insurance company, seeking to recover assigned first-party no-fault benefits. The insurer moved for summary judgment, arguing that it had not provided coverage for the vehicle that allegedly was involved in the accident. In support of its motion, the insurer submitted affidavits by its claim litigation representative and products specialist establishing that the vehicle driven by the health care provider’s assignor at the time of the accident had not been covered by any insurance policy it had issued. The trial court granted the insurer’s motion, and the appellate court affirmed. It concluded that the insurer had demonstrated that the alleged injuries had not arisen out of an insured incident and that the health care provider had not raised a triable issue of fact in opposition. [Compas Med., P.C. v. Travelers Ins. Co., 2016 NY Slip Op 51247(U) (App. Term 2d Dep’t Aug. 18, 2016).]

Underlying Plaintiff Did Not Have Standing To Appeal Insurer’s Default Judgment Against Insured In Coverage Action

Cynthia Smith sued a property owner for injuries she allegedly suffered in a slip and fall on its property. The owner’s insurer disclaimed coverage on the basis of untimely notice and filed a declaratory judgment action. The insurer moved for a default judgment against the owner and Smith. The owner did not oppose the motion and Smith did not oppose the insurer’s request for a default judgment against the owner.  Instead, Smith argued that the action against her should be dismissed as abandoned. The trial court granted the insurer’s motion for a default judgment against the owner and dismissed its action against Smith, and she appealed. The Appellate Division, First Department, observed that Smith could have opposed the insurer’s position on coverage, but that she had elected to seek dismissal on procedural grounds. Having been granted the relief Smith sought on her own behalf, the court concluded that she was not an “aggrieved party” and did not have standing to appeal from the order granting the default judgment against the owner. It then dismissed her appeal. [Hermitage Ins. Co. v. 186-190 Lenox Rd., LLC, 2016 N.Y. Slip Op. 05731 (1st Dep’t Aug. 4, 2016).]

Whether Insured Had Intended Misstatements In Proof Of Loss To Defraud Insurer Was Issue For Trial

A fire damaged a Brooklyn home and the insured submitted a claim to his insurer. The insurer denied the claim and the insured sued. The insurer moved for summary judgment, contending that the insured had violated the concealment or fraud condition of the policy by making certain material misrepresentations in his proof of loss statements. The trial court denied the motion and the insurer appealed. The Appellate Division, Second Department, affirmed. The court reasoned that, although the insured may have given inaccurate information in his proof of loss statements, a triable issue of fact existed as to whether he had intended to defraud the insurer and whether the alleged misrepresentations had been sufficiently material to warrant denial of coverage. [Walker v. Tighe, 2016 N.Y. Slip Op. 05753 (2d Dep’t Aug. 10, 2016).]

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