New York Federal Court Affirms Insurer's Proration of Defense Cost Payments; Enforces Notice Requirements in Claims-Made-and-Reported Policy
Travelers Indem. Co. v. Northrop Grumman Corp.,
2013 U.S. Dist. LEXIS 161552 (S.D.N.Y. Oct. 31, 2013)
The Southern District of New York ruled that an insurer was not required to pay more than its agreed 25% of defense costs and refused to require the payment of defense costs on an all sums basis. The Court further held that Environmental Hazard policies with "claims made and reported" language were to be strictly construed such that a claim that arose in December but was tendered to the insurer in January was untimely under a policy that expired in December (because tender was not made until January) and under a separate policy that commenced in January (because the claim first arose in December). Additionally, the Court ruled that late notice was a complete defense to coverage with respect to one site in this environmental coverage action.
After conducting a priority of coverage analysis, a New York trial court ruled that a general contractor's insurer is not required to contribute toward an adverse verdict until the subcontractor's umbrella policy limits have been exhausted, pursuant to the policy language and law.
This declaratory judgment action was filed by the insurer that issued primary and umbrella coverage to a general contractor, against the umbrella insurer of the subcontractor, seeking a ruling that it is not required to contribute to any possible damages unless the umbrella policy is exhausted. The court noted that the first step in analyzing the priority of coverage amongst the implicated policies is to ascertain "the purpose each policy was intended to serve as evidenced by both its stated coverage and the premium paid for it, as well as upon the wording of its provision concerning excess insurance to avoid distorting the meaning of the terms of the policies involved."
The Court held that the federal Motor Carrier Act of 1980 (MCA ) was not applicable to a rental truck that caused an accident while traveling only within New Jersey after concluding that a "trip-specific" analysis showed the truck was not engaged in interstate commerce sufficient for the MCA, particularly the $750,000 coverage mandated by the MCA, to apply in this case.
An individual with no personal automotiveinsurance rented a moving truck covered by insurance with limits of $15,000 per person and $30,000 per accident. The individual was involved in a traffic accident while driving the moving truck. The counterpart vehicle's insurer paid PIP benefits for the driver and passengers in that car and looked to the rental truck insurer for reimbursement. The rental truck insurer maintained that its coverage had been exhausted by a previous $30,000 settlement of the injured parties' claims. This coverage dispute focused on whether the rental truck insurer's coverage was exhausted.
A subrogating insurer who paid for fire damage to two boats owned by its policyholders sought a declaration that the commercial auto/ garage insurer covered the liability of the alleged tortfeasor responsible for the fire. The Appellate Division found an exclusion in the insurer's policy clear and unambiguous and applied to bar coverage. The panel also refused to find that the insurer was estopped from relying on the exclusion by not mentioning the provision in its answers to interrogatories.
A fire at a public marina damaged two boats. One of the boats was owned by an individual who had considered donating it to charity. The individual who served as the facilitator of this donation was the principal officer of a company engaged in the business of buying, repairing, and selling boats. This facilitating individual had transported the boat to the public marina -- apparently without the owner's permission; and it was the facilitator's friend who had negligently started the fire. The property insure for the damaged boats paid for the damage and then filed a subrogation claim against the facilitator, his friend, and the facilitator's company.