New York Insurance Coverage Law Update

Claims-Made Policy Afforded Insured 60 Days After End Of Term To Notify Insurer 

An employee of New York Institute of Technology (“NYIT”) sued NYIT for defamation on February 26, 2009, and NYIT received notice of the action on August 6, 2009. NYIT’s claims-made-and-reported insurance policy ended on September 1, 2009. NYIT notified its insurer of the employee’s action on September 15, 2009. The insurer disclaimed coverage on the ground that NYIT failed to report the claim during the policy period, NYIT sued, and the insurer moved to dismiss. The court denied the insurer’s motion. It ruled that NYIT’s notice was timely because the policy should have afforded NYIT an additional 60 days at the end of the policy term to notify the insurer of the employee’s suit under New York law, notwithstanding that NYIT first received notice of the suit during the policy period and not during its extended reporting period. [New York Inst. of Tech. v. National Union Fire Ins. Co. of Pittsburgh, PA, 2017 N.Y. Slip Op. 30345(U) (Sup. Ct. N.Y. Cty. Feb. 23, 2017).]

Alleged Abuse In Foster Home Over Many Years Constituted Multiple Occurrences 

Ten individuals who had been placed as foster children in a woman’s home sued the Roman Catholic Diocese of Brooklyn, alleging that they had been abused there over many years. Insurers contended that there were multiple occurrences triggering separate self-insured retentions, and the court agreed. Applying New York’s “unfortunate event test” in the absence of controlling policy language, the court ruled that the alleged incidents of abuse suffered by each of the underlying claimants constituted multiple occurrences. The court concluded that there was at least one “occurrence” per claimant per policy period because the injuries allegedly suffered by each claimant were unique to that claimant in a given policy year and caused by separate incidents. [National Union Fire Ins. Co. of Pittsburgh, PA v. Roman Catholic Diocese of Brooklyn, 2017 N.Y. Slip Op. 30368(U) (Sup. Ct. N.Y. Cty. Feb. 27, 2017).]

New York’s Top Court Rules That Contractor’s Tools Exclusion Did Not Render Coverage “Illusory”

A construction manager contended that the contractor’s tools exclusion in a builder’s risk insurance policy should not be enforced because it rendered illusory coverage granted under the policy’s temporary works provision. New York’s highest court, the Court of Appeals, ruled that the exclusion did not render coverage illusory because it did not defeat all of the policy’s coverage for temporary works and did not create a result that “would have the exclusion swallow the policy.” [Lend Lease (US) Constr. LMB Inc. v. Zurich Am. Ins. Co., 2017 N.Y. Slip Op. 01141 (N.Y. Feb. 14, 2017).]

“Arising Out Of” Exclusion Precluded Coverage For Employee’s Injuries

An employee of Truck-Rite Distributions Systems Corp. alleged that he was injured while unloading a shipping trailer leased to Truck-Rite when a lift gate failed and he fell. The court ruled that there was no coverage for the claim under a truckers policy issued to Truck-Rite because of the exclusion for bodily injury “arising out of” the use, including the loading and unloading, of autos operated by or rented or loaned to Truck-Rite. The court ruled that the fact that the employee’s injury allegedly had been caused by the defective nature of the trailer lift did “not remove the injury from the policy exclusion.” [Country-Wide Ins. Co. v. Excelsior Ins. Co., 2017 N.Y. Slip Op. 00718 (1st Dep’t Feb. 2, 2017).]

Exclusion For Any “Employment-Related Wrongful Act” Barred Coverage For FLSA And Labor Law Claims

Plaintiffs alleged that Vannguard Urban Improvement Association, Inc. and the chair of Vannguard’s board of directors violated the federal Fair Labor Standards Act or New York Labor Law in a variety of ways. The board chair sought a defense under Vannguard’s directors and officers liability policy. Vannguard’s insurer denied the claim based on the policy’s exclusion for “any employment-related Wrongful Act.” The court ruled that the exclusion “unam-biguously” encompassed claims regarding violations of wage laws and retaliation for complaints about violations of wage laws. The court concluded that it was “clear” that the policy did not insure against the “employment-related” claims raised by the plaintiffs in the underlying action. [Hansard v. Federal Ins. Co., 2017 N.Y. Slip Op. 00633 (2d Dep’t Feb. 1, 2017).]