New York Insurance Coverage Law Update

December 21, 2018 | Alan C. Eagle | Insurance Coverage

Assignee Of Winning Bid At Foreclosure Sale Not Entitled To Insurance Proceeds For Water Damage To The Property

A bank that was the highest bidder at a foreclosure sale assigned its bid to Wilmington Savings Fund Society, and Wilmington received a referee’s deed for the property.  After a water pipe burst in the dwelling located on the property, Wilmington claimed that it was entitled to the insurance proceeds under a home-owners policy issued to the original owner. The court granted the insurer’s motion for summary judgment, explaining that the insurance policy never insured Wilmington as the new owner of the property.  The court noted that Wilmington was not a named insured or additional insured on the policy.  The court also noted that Wilmington was not a mortgagee on the property because its insurable interest was extinguished after it obtained title and failed to obtain a deficiency judgment for any debt that may have remained after the foreclosure. [Wilmington Savings Fund Soc. v. Automobile Ins. Co. of Hartford, No. 50708/2017 (Sup. Ct. Dutchess Co. Nov. 27, 2018).] 

No Coverage For Injury That Allegedly Occurred While Employee Was Loading Parked Truck

An employee of a contractor performing construction at a public school in the Bronx was allegedly injured while loading material onto a parked flatbed truck.  He sued the New York City School Construction Authority (“NYCSCA”), which sued the contractor’s auto insurer, seeking defense and indemnity. The policy defined “insured” to include an organization with respect to liability for “acts or omissions of any person covered … while driving [the contractor’s] covered auto” or anyone else “driving [the contractor’s] insured auto” with permission.  The court granted the insurer’s motion for summary judgment, reasoning that the alleged injury to the employee did not occur while he was “driving” the insured truck. The court was not persuaded by NYCSCA’s argument that it had coverage under the policy for injuries occurring while the truck was being loaded and unloaded. The court concluded that even if the policy covered loading and unloading, it did so only for the insured company and not for NYCSCA or any other third party. [New York City School Constr. Auth. v. New South Ins. Co., 2018 N.Y. Slip Op. 32867(u) (Sup. Ct. N.Y. Co. Nov. 7, 2018).]

Water Exclusion Barred Coverage For Superstorm Sandy Claim

Superstorm Sandy flooded a catering hall in downtown Manhattan, and the insured made a claim with its insurer for business income loss and damage to business property.  Relying on the policy’s water exclusion, the insurer denied the claim, and the insured sued. The court granted summary judgment in favor of the insurer, finding that the water exclusion barred coverage.  The court reasoned that the exclusion precluded coverage for any loss or damage from flood waters, water driven by wind, and storm surge, all of which resulted from Sandy, causing the damage to the catering hall. The court added that even if an electrical surge was responsible for some of the damage to the catering hall’s elevators, the policy made it “clear” that there was no coverage for loss or damage from an excluded cause “regardless of any other cause or event that contributes”.   Finally, the court rejected the insured’s argument that the water exclusion did not apply to coverage under the policy’s equipment breakdown endorsement because the endorsement stated that “all exclusions in the Causes of Loss Forms” applied except as otherwise provided in the endorsement. [Glazier Group, Inc. v. Nova Cas. Co., 2018 N.Y. Slip Op. 32576(U) (Sup. Ct. N.Y. Co. Oct. 5, 2018).]

Insurance Policy For Townhouse Was Void Where Applicants Misrepresented That It Would Be Owner-Occupied, Second Department Rules

The insureds made a claim under their homeowners’ insurance policy after a pipe broke and water damaged their townhouse in Monsey, New York.  Their insurer dis-covered that the insureds had never lived at the townhouse and that it was occupied by their daughter and her family. The insurer disclaimed coverage and voided the policy, and the insureds sued. The Supreme Court, Kings County, granted judgment in favor of the insurer, finding that the insureds made material misrepresentations on their insurance application and, therefore, the policy was void ab initio and provided no coverage for the insureds’ claim. The Appellate Division, Second Department, affirmed. The Second Department reasoned that the insureds’ insurance application contained a material misrepresentation regarding whether the townhouse would be owner-occupied and the insurer demon-strated that it would not have issued the policy if it had known that it was not owner-occupied.  The Appellate Division, Second Department, rejected the insureds’ argument that the insurer had to establish that their misrepresentation was “willful.” [Piller v. Otsego Mut. Fire Ins. Co., 2018 N.Y. Slip Op. 05615 (2d Dep’t Aug. 1, 2018).]

Related Publications


Get legal updates and news delivered to your inbox