New York Insurance Coverage Law Update

Court Holds Insurer Did Not Establish Insured’s Failure To Cooperate

An insurer’s disclaimer based on the insured’s lack of cooperation was challenged in court. The Appellate Division, Second Department, found that the insurer made diligent efforts that were reasonably calculated to obtain its insured’s cooperation. However, the court ruled that the disclaimer could not be enforced because the insurer  had not demonstrated that its insured’s   conduct constituted “willful and avowed obstruction.” [Matter of Government Empls. Ins. Co. v. Fletcher, 2017 N.Y. Slip Op. 01199 (2d Dep’t Feb. 15, 2017).]

Fourth Department Holds General Contractor Entitled To Additional Insured Coverage Under Policy Of Subcontractor, Claimant’s Employer

Time Cap Development Corp., the general contractor on a construction project, was sued by a subcontractor’s employee for injuries he allegedly sustained at the construction site.  Time Cap was an additional insured on the subcontractor’s insurance for liability for bodily injury “caused, in whole or in part, by … acts or omissions of those acting on [the subcontractor’s] behalf….” The Appellate Division, Fourth Department, held that Time Cap was entitled to coverage as an additional insured because the “deposition testimony established” that the bodily injury was “caused at least in part by the ‘acts or omissions’ of one acting on the subcontractor’s behalf, i.e., the insured laborer himself, regardless whether the subcontractor was negligent.”  [Time Cap Dev. Corp. v. Colony Ins. Co., 2017 N.Y. Slip Op. 02534 (4th Dep’t March 31, 2017).]

No Additional Insured Coverage For School District That Leased Cafeteria To Insured Where Accident Allegedly Occurred On Exterior Staircase

The Chappaqua Central School District leased the cafeteria in a middle school building to the Chappaqua Children’s Workshop, Inc. (“CCW”) to use for an after-school program. A CCW employee allegedly was injured when she tripped and fell while descending an exterior staircase that led from the school to the parking lot. The employee sued the District, and the District sought coverage as an additional insured under CCW’s policy.  The Appellate Division, Second Department, held that CCW’s insurer was not obligated to defend or to indemnify the District because the District-lessor was only covered for “liability arising out of the ownership, maintenance or use of that part of the premises leased or rented to [CCW],” the cafeteria.  The court opined that there was “no causal relationship between the injury and risk and for which coverage is provided.” [Chappaqua Cent. School Dist. v. Philadelphia Indem. Ins. Co., 2017 N.Y. Slip Op. 02015 (2d Dep’t March 22, 2017).]

Subcontractor’s Insurer Could Not Disclaim Coverage Where It Failed To Send Disclaimer Directly To General Contractor

A partially demolished five-story building collapsed, causing debris to fall onto the street, resulting in personal injury actions against the owner of the building and the general contractor.  Just after the collapse, the general contractor’s insurer provided notice to the insurer for the demolition sub-contractor, demanding that the sub-contractor’s insurer defend and indemnify the owner and the general contractor.  The subcontractor’s insurer sent a letter to the general contractor’s insurer disclaiming to the general contractor based upon a policy exclusion for “work over 1 story in height.” The insurer did not disclaim as to the owner and did not send notice of disclaimer directly to the owner or the general contractor.  The Appellate Division, Second Department, ruled that the owner was not entitled to coverage because it did not qualify as an insured, and that New York Insurance Law’s timely disclaimer requirement did not apply because the denial was “based on a lack of coverage, rather than on a policy exclusion.”  However, the court held that the disclaimer as to the general contractor based on the exclusion was defective because it was not sent directly to the general contractor. The court reasoned that although the general contractor’s insurer had been acting on its behalf when it sent notice to the subcontractor’s insurer, this did not make the insurer the general contractor’s agent for all purposes or for the specific purpose of receiving a notice of disclaimer. [Harco Constr., LLC v. First Mercury Ins. Co., 2017 N.Y. Slip Op. 01846 (2d Dep’t March 15, 2017).]

Court Finds Fact Question As To Whether Insureds Resided At Insured Home Destroyed By Fire, Precluding Summary Judgment

While a married couple stayed at the wife’s mother’s residence to care for her, their two sons, a cousin, and a friend stayed at the couple’s home. After their home was destroyed by a fire, the couple’s insurer disclaimed, contending that it was not a covered dwelling because the couple had not resided in their home for over two years. The couple sued and the parties moved for summary judgment. The court denied the motions, finding a question of fact as to whether the couple had continued to “reside” at the insured home while they were caring for the wife’s mother. [Harrison v. Allstate Indem. Co., 54 Misc. 3d 1224(A) (Sup. Ct. Steuben Cty. 2017).]