Insurance Coverage Update - May 2015

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Covered in this post: 

  • Court Grants Summary Judgment in Favor of Insurer Based on Policyholder's Unexcused Delay in Providing Notice
  • New York Trial Court Finds Coverage But Denies Bids for Attorney's Fees and Finding of Insurer Bad Faith
  • District Court Finds No Bad Faith Where Question of Material Fact Remained at Summary Judgment Stage of Coverage Suit
  • Bad Faith and Consumer Fraud Act Claims Survive Motion to Dismiss in Accident Disability Coverage Dispute

NEW YORK


Late Notice

Court Grants Summary Judgment in Favor of Insurer Based on Policyholder's Unexcused Delay in Providing Notice
Freeway Company, LLC v. Technology Insurance Company, 2015 N.Y. Misc. LEXIS 1439, 2015 NY Slip Op 30662(U)

The Supreme Court of New York, New York County granted an insurer's motion for summary judgment and denied the policyholder's competing summary judgment motion in a declaratory judgment action filed by the policyholder against its insurer seeking a declaration that the insurer had a duty to defend and indemnify the policyholder in an underlying case pursuant to the policyholder's Commercial General Liability Insurance Policy ("CGL").

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Additional Insured - Bad Faith

New York Trial Court Finds Coverage But Denies Bids for Attorney's Fees and Finding of Insurer Bad Faith
100 Church Fee Owner LLC v Harleysville Worcester Ins. Co., 2015 N.Y. Misc. LEXIS 1350 (N.Y. Sup. Ct. Apr. 21, 2015)

New York Supreme Court decides that an insurer's duty to defend a building owner as additional insured was triggered when a contractor's employee brought suit after being injured while installing windows in the building. But the Court also found the additional insured was not entitled to attorney's fees or a finding of insurer bad faith.

Plaintiff hired a contractor to install windows at a building it owned. The contractor's Policy included an endorsement stating that additional insured coverage extends to "any person for whom you are performing operations only as specified under a written contract ... that requires that such person or organization be added as an additional insured on your policy." The contractor and Plaintiff's written contract, in turn, required that the contractor name Plaintiff as an additional insured "for claims caused in whole or in part by [the contractor's] negligent acts or omission[] during [the contractor's] operations."

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NEW JERSEY


Bad Faith
District Court Finds No Bad Faith Where Question of Material Fact Remained at Summary Judgment Stage of Coverage Suit
Dooley v. Scottsdale Ins. Co., 2015 U.S. Dist. LEXIS 19140 (D.N.J. Feb. 18, 2015)

A New Jersey District Court found questions of fact regarding whether Insureds exercised "reasonable care" in heating their home. The Court therefore dismissed their bad faith claim, reasoning that the factual question showed that coverage under the policy in relation to the Insureds' loss had been "fairly debatable" at the time the Insurer disclaimed.

The Insured stayed with his co-Insured spouse at their shore home on the weekend of December 11-12, 2010. They returned December 31, 2010 to find that a leak from a second floor bathroom had discharged approximately 22,000 gallons of water throughout the house, causing $160,000 of property damage. Weather records showed that the bathroom pipes must have frozen on December 15 and thawed on December 17, four days before police shut off the water valve. Insureds then sought coverage under their surplus lines homeowner's policy.
 
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Bad Faith - Accident Disability Coverage
Bad Faith and Consumer Fraud Act Claims Survive Motion to Dismiss in Accident Disability Coverage Dispute
Zodda v. Nat'l Union Fire Ins. Co., 2015 U.S. Dist. LEXIS 26206 (D.N.J. Mar. 4, 2015)

A New Jersey District Court dismissed counts of equitable reformation and violation of the implied covenant of good faith and fair dealing alleged by an Insured who argued an Insurer had issued him an illegal and worthless accident disability policy. Other claims brought by the Insured survived dismissal, however, including counts of bad faith and a Consumer Fraud Act violation.

The Insured fell in 2009 and suffered a massive cerebral hemorrhage, resulting in permanent brain damage. He subsequently remained under constant institutional care until he died in 2011. The Insured's estate requested coverage for the loss under an accident disability insurance policy. The Insurer disclaimed, stating that the Insured did not meet the policy's definition of "disability."
   
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