New York Insurance Coverage Update

January 1, 2014 | Insurance Coverage

Insurer Ordered To Produce Electronic Claims Diary and Counsel’s Letters Concerning Their Investigation On Behalf Of Insurer

Insureds claimed that their boat had been vandalized. Their insurer denied the claim and the insureds sued. The insureds then moved to compel the insurer to produce an unredacted copy of an electronic claims diary prepared by an employee of the insurer, as well as certain letters from the insurer’s counsel prepared while investigating the claim on behalf of the insurer. The material sought had been prepared before the denial of the claim. The court rejected the insurer’s argument that the materials were protected by the attorney-client privilege, reasoning that they had been “prepared as part of the [insurer’s] investigation into the claim, and were not primarily and predominantly of a legal character.” [Melworm v. Encompass Indem. Co., 2013 N.Y. Slip Op. 08415 (App.Div.2d Dep’t Dec. 18, 2013).]

Prior Property Manager Was Not Entitled to Coverage Under Owner’s Policy

A person allegedly injured at a building in June 2007 sued the company that was the property manager from September 2002 through August 2006. The manager tendered its defense to the insurer that had issued a policy to the building owner effective from June 1, 2007 to June 1, 2008. The policy covered any organization “acting as the [owner’s] real estate manager” for bodily injury “during the policy period” that is caused by an “occurrence.” The court found that the insurer had no duty to defend or to indemnify the manager, holding that the policy only covered the “entity acting as the owner’s real estate manager during the policy’s effective dates and for ‘occurrences’ which occur within those dates.” [ABM Mgmt. Corp. v. Harleysville Worcester Ins. Co.,2013 N.Y. Slip Op. 08393 (App.Div.2d Dep’t Dec. 18, 2013).]

Plaintiff’s Suit Against Defendant’s Insurer is Dismissed Because Plaintiff Had Not Yet Obtained A Judgment Against the Insured

A person who alleged that he was injured at a building in Brooklyn sued the company that leased the property. He also brought a separate action against the lessee’s insurance company. The court dismissed the plaintiff’s action against the insurer, finding that, having not obtained a judgment against the lessee, the plaintiff lacked standing to bring a direct action against the insurer. [Alfonso v. Zurich Am. Ins. Co., 2013 N.Y. Slip Op. 52168(U) (Sup.Ct. Kings Co., Dec. 4, 2013).]

Failure to Promptly Report Alleged Hit-and-Run Accident Dooms Driver’s UIM Claim

A driver who alleged that he had been injured by a hit-and-run vehicle sought uninsured motorist (“UIM”) benefits. The insurer disclaimed coverage and the driver demanded arbitration of his UIM claim. The Appellate Division, Second Department, permanently stayed the arbitration because the driver breached his policy by failing to report the alleged accident to the police or to the Commissioner of Motor Vehicles within 24 hours of the accident or as soon as reasonably possible thereafter. [Matter of Government Employees Ins. Co. v. Bartlett,2013 N.Y. Slip Op. 08440 (App.Div. 2d Dep’t Dec. 18, 2013).]

Court Dismisses Homeowners’ Fraud Claims Against Their Flood Insurer 

Homeowners who alleged that their property had been damaged by Superstorm Sandy sued their flood insurer for fraudulent misrepresentation and inducement in connection with the advertising and marketing of its flood insurance policies. The court dismissed those claims, finding that the homeowners had not alleged that the insurer owed them any legal duty separate from its duty to perform under the insurance policies and that the only misrepresentation they had alleged related to the insurer’s future obligations under the policies. [Smith v. American Security Ins. Co., No. 13-CV-6328(JS)(ARL) (E.D.N.Y. Dec. 16, 2013).]

Second Circuit Upholds Disclaimer That Incorrectly Quoted Assault-and-Battery Exclusion

After an insured was sued, his insurer sought a declaration that it was not obligated to defend or indemnify him. The court upheld the insurer’s disclaimer, finding that the policy’s assault-and-battery exclusion barred coverage because the action against the insured would not have arisen “but for” the alleged assault. The court also decided that the insurer’s disclaimer was sufficient even though it may have quoted an earlier version of the exclusion, reasoning that the disclaimer gave “sufficient notice of the particular language” on which the insurer relied to disclaim coverage. [Atlantic Casualty Ins. Co. v. Coffey, No. 13-216-cv (2d Cir. Dec. 11, 2013).] 

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