January 2025 New York Insurance Coverage Law Update

Court Finds “Insured Location” Exception To Business Exclusion Inapplicable Because Insured No Longer Resided At Location And Insured Has Obligation To Know Policy Terms

The insured owned premises located in Huntington Station, NY. The Claimant was allegedly injured when she slipped and fell at the premises. The Claimant sued the insured and the insured sought coverage under her homeowners policy issued by Mountain Valley Indemnity Company (MVIC), which covered “bodily injury, except where such injury, among other things, arises out of a business engaged in by the insured, the rental of any premises owned by the insured, rented to an insured, or rented to others by an insured, other than the ‘insured location.’” “Insured location” was defined as the premises where the insured resides and identified in the declarations and includes a two-family dwelling where the insured resides in one of the units. The premises where the accident occurred was identified in the declarations as the insured’s residence premises. Through its investigation, MVIC learned that the insured was not living at the premises at the time of the accident. MVIC disclaimed coverage on the basis that the premises was no longer the insured’s residence premises and, thus, not an insured location under the policy and filed a declaratory judgment action. At deposition, the insured testified that she moved from the premises at least three years before the accident. MVIC moved for summary judgment seeking a declaration that it had no duty to defend or to indemnify the insured. The court granted the motion, finding that MVIC “established prima facie entitlement to summary judgment by submission of the policy and [the insured’s] statement regarding her residence.” The insured, who speaks little English, argued that she did not understand the provisions of the policy, including that she had to reside at the premises. The court rejected this argument, explaining that an insured is “under the obligation to exercise ordinary diligence to ascertain the terms” of the policy and the insured “cannot now claim ignorance of the policy when she has not sought to have it provided to her in a language that she can read fluently.” [Mountain Valley Indem. Co. v. Coen, 2024 N.Y. Misc. LEXIS 22406 (Sup. Ct., N.Y. Cnty. Nov. 15, 2024).]

Southern District Enforces Suit Limitation In Policy And Finds Insurer Did Not Waive By Not Raising In Disclaimer

In 2017, the insured purchased a nine-story office building in Pensacola, Florida, and hired contractors to perform renovations to the building, including the installation of a skylight. The skylight leaked upon installation and the contractors attempted to repair it, but it continued to leak through 2020. In 2020, Mt. Hawley Insurance Company and Renaissance Re Syndicate 1458 Lloyd’s (“RenRe”) issued a policy to the insured insuring the building. The policy provided that, if the parties disagree on the amount of loss associated with a claim, the parties may obtain independent appraisals to be submitted to an impartial umpire for resolution, but RenRe retained the right to nevertheless deny the claim. The policy further provided that “[n]o one [could] bring a legal action against [RenRe]” unless “[t]he action [was] brought within 2 years after the date on which the direct physical loss or damage occurred.” On September 16, 2020, Hurricane Sally struck Florida and, two days later, the insured notified RenRe of a claim for damage to the building from the hurricane, including damage to the skylight and other windows. The parties disagreed on the amount of covered loss and invoked the appraisal provision in the policy. RenRe’s appraiser determined that the damage to the skylight and windows was due to improper installation and maintenance and not covered. The insured’s appraiser determined that they sustained damage from the hurricane that was covered. An umpire entered an award for the insured that included the cost of replacing the skylight and windows. By letter dated April 21, 2023, RenRe denied coverage for the damage to the skylight and windows. On February 5, 2024, the insured filed suit against RenRe for the full appraisal award. RenRe filed an initial answer and, two months later, amended its answer raising for the first time the policy’s two-year suit limitation as an affirmative defense. RenRe then moved for summary judgment arguing, among other things, that the insured’s action should be dismissed because it was filed after the policy’s two-year limitation period. In opposition, the insured argued that RenRe waived its suit limitation defense by not raising it in its denial letter. RenRe maintained that its general reservation of rights in its denial letter “was sufficient to reserve its right to raise the policy’s two-year suit limitation in its amended answer.” The court rejected this argument, explaining that RenRe’s “’boilerplate’ reservation-of-rights language” in its denial letter is not sufficient to “preserve defenses not explicitly raised at that point.” However, the court granted RenRe’s motion, explaining that the suit limitation provision is not a waivable coverage defense; it is a “prohibition on an insured’s belatedly bringing suit” that does not need to be raised until the insured attempts to bring suit. [Civic Conversations, LLC v. Mt. Hawley Ins. Co., 2024 U.S. Dist. LEXIS 205445 (S.D.N.Y. Nov. 12, 2024).]