New York Insurance Coverage Update

September 1, 2014 | Insurance Coverage

Insured’s Indemnification Obligation Did Not Create Insurance Coverage Where None Otherwise Existed, Court Finds 

Claimant sued Boulder Creek and BIT Investment for injuries she allegedly sustained when she fell outside premises owned by BIT and leased to Boulder Creek.  Boulder Creek asserted a cross-claim against BIT for contractual indemnity under the lease and sought coverage for the underlying action under BIT’s insurance policy from BIT’s insurer.  The court granted the insurer’s motion for summary judgment, agreeing that Boulder Creek was not entitled to coverage as it did not qualify as an additional insured under the policy, which limited such coverage to an organization “on file with the company.”  The court also found that any provision in the lease obligating BIT to indemnify Boulder Creek did “not create insurance coverage for Boulder Creek” where none otherwise existed. The court rejected Boulder Creek’s argument that it was entitled to coverage by virtue of the “insured contract” exception to the contractual liability exclusion in BIT’s policy, finding that the exception merely contemplates coverage to the insured (BIT) if BIT is found liable for contractual indemnity, and “in no way triggers a contractual obligation on the part of the insurer to defend a stranger to the insurance contract, that is, Boulder Creek.”  [Boulder Creek of Riverhead, LLC v. Travelers Property Cas. Co. of America, No. 20545/2012 (Sup. Ct. Suffolk, Co., July 21, 2014).]

 No-Fault Insurer Did Not Have To Specify Reason For EUO, Appellate Court Rules 

A health care provider sued an insurance company to recover assigned first-party no-fault benefits. The trial court found that the insurer had timely and properly denied the claim on the ground that the plaintiff had failed to appear for scheduled examinations under oath (“EUOs”). The plaintiff appealed, arguing that the insurer lacked justification for its EUO requests. Observing that an appearance at an EUO was “a condition precedent to the insurer’s liability on the policy,” the appellate court concluded that the insurer did not have to specify a reason for an EUO. [Flow Chiropractic, P.C. v. Travelers Home & Mar. Ins. Co., 2014 N.Y. Slip Op. 51142(U) (App. Term 2d Dep’t July 7, 2014).]

Contract Required Contractor To Obtain Liability Insurance On Property, Not To Name Owner As An Additional Insured 

B.J. Muirhead agreed to provide main-tenance services at a plant owned and operated by General Motors, and to obtain insurance for “liability arising from premises.” After a Muirhead employee sued G.M. alleging that he had been injured by a dangerous condition at the plant, G.M. sued Muirhead for failing to obtain additional insured coverage protecting G.M. The court dismissed the complaint, finding that the agreement did not require that G.M. be named as an additional insured on Muirhead’s policy. [General Motors, LLC v. B.J. Muirhead Co., Inc., 2014 N.Y. Slip Op. 05720 (4th Dep’t Aug. 8, 2014).

Employee Barred From Receiving SUM Benefits Under Employer’s Auto Policy 

In a matter of first impression in New York, the Appellate Division, Fourth Department, ruled that an employee, who was injured in a motor vehicle accident while in the course of her employment and was barred by the workers’ compensation law from suing her co-employee based upon negligence, was not entitled to supplementary uninsured or underinsured motorist (“SUM”) benefits under her employer’s automobile liability insurance policy. The court reasoned that the employee could not receive SUM benefits because she was not “legally entitled to recover damages” from the vehicle’s owner or operator. [Hauber-Malota v. Philadelphia Ins. Cos., 2014 N.Y. Slip Op. 05705 (4th Dep’t Aug. 8, 2014).]

Owners’ Property Claim Within Policy’s Entrustment Exclusion, Court Rules 

Property owners allegedly leased their insured property to a tenant who removed the kitchen cabinets and appliances to turn the kitchens into additional dormitory areas for a youth hostel. When the hostel closed, the tenant did not return the cabinets or appliances. The property owners sought first-party property coverage for their loss. The court held that coverage was precluded by an exclusion for loss due to “[d]ishonest or criminal act[s]” committed by anyone to whom the owners entrusted the insured property for any purpose. The court determined that the term “entrustment” refers to the entire premises, including fixtures. [Lexington Park Realty LLC v. National Union Fire Ins. Co. of Pittsburgh, PA, 2014 NY Slip. Op. 05817 (1st Dep’t Aug. 14, 2014).]

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