September 2026 New York Insurance Coverage Update

First Department Holds Pollution Exclusion Precludes Coverage For Remediation Of Environmental Contamination

A mining company, Vale Canada Limited, faced potential liability for environmental contamination allegedly resulting from its operations at various sites. Vale sought coverage from its insurers, North River Insurance Company and United States Fire Insurance Company, and litigation ensued. On summary judgment, the Supreme Court, New York County, granted the insurers’ motions, finding that the pollution exclusions in their policies barred coverage. Vale appealed and the Appellate Division, First Department, affirmed, holding “the insurers established that Vale’s claims with respect to the four test sites were caused by contamination arising from leaching through acid rock drainage, a gradual process often occurring over decades, not a sudden or abrupt event that was exempt from the exclusion.” The court explained that, as to two of the four test sites, Vale “could identify no temporally abrupt event” and, as to the other two, “Vale’s corporate representative testified that she was not aware of any temporally abrupt events at either site that caused the discharge of pollutants.” The court found that the pollution exclusion also barred coverage for 18 additional sites. [Travelers Cas. & Sur. Co. v. Vale Canada Ltd., et al., 252 A.D.3d 442 (1st Dep’t Aug. 27, 2026)].

Southern District Grants Insured’s Motion For Attorneys’ Fees From Excess Insurer

Systems 2000 Plumbing Service, Inc., performs plumbing work in residential buildings. A fire occurred at one of the buildings and Systems 2000 sought coverage from its primary and excess insurers for its alleged liability for damage resulting from the fire. The primary insurer initially disclaimed coverage but later agreed to defend and to indemnify Systems 2000. GuideOne National Insurance Company, the excess insurer, filed an action against Systems 2000 seeking a declaration of no coverage under its policy. After a bench trial, the Southern District of New York ruled that GuideOne was obligated to cover Systems 2000 for the claims arising from the fire. Systems 2000 then filed a motion seeking to recover its attorneys’ fees incurred defending against GuideOne’s action. The Southern District granted the motion. The court explained that an insured may recover attorneys’ fees from its insurer under New York law “when [the insured] has been cast in a defensive posture by the legal steps an insurer takes in an effort to free itself from its policy obligations.” The court acknowledged that it is the insurer’s “contractual agreement to provide a defense that gives rise to the basis for attorneys’ fees.” Because the damages claimed in the lawsuits against Systems 2000 far exceeded the limit of its primary policy and GuideOne’s duty to defend was “looming” and “likely … triggered,” the court granted Systems 2000’s motion for fees. [GuideOne Nat’l Ins. Co. v. Systems 2000 Plumbing Svs., Inc., 22-CV-5018 (JPO), 2026 WL 2566452 (S.D.N.Y. Aug. 31, 2026)].

Southern District Dismisses Insured’s GBL § 349 And Bad Faith Claims

Mid-Hudson Civic Center, Inc., owns property that was damaged by wind and rain. Everest National Insurance Company denied coverage for the damage under a commercial property policy. Mid-Hudson then sued Everest, alleging Everest wrongfully denied coverage and asserting claims for breach of contract, deceptive business practices in violation of General Business Law § 349, and breach of the covenant of good faith and fair dealing. Everest moved to dismiss the GBL § 349 and breach of the covenant of good faith and fair dealing claims. The Southern District of New York granted the motion. The court dismissed Mid-Hudson’s GBL § 349 claim because the “action is a private dispute regarding coverage under an insurance policy and [Mid-Hudson] failed to allege consumer-oriented conduct,” and dismissed its bad faith claim because it was based solely upon Everest’s denial of coverage and was, therefore, duplicative of Mid-Hudson’s breach of contract claim. [Mid-Hudson Civic Ctr., Inc. v. Everest Nat’l Ins. Co., 25-CV-4947 (NSR), 2026 WL 2351501 (S.D.N.Y. Aug. 13, 2026)].