October 2024 New York Insurance Coverage Law Update

Northern District Denies Insurer’s Motion For Summary Judgment Finding Questions Of Fact Whether Insured Expected Or Intended Claimant’s Injuries  

The insured admittedly punched and threw the claimant to the ground, but the insured maintained during her plea for reckless assault in criminal court that the claimant was the aggressor, she acted in self-defense, and that she did not intend claimant’s injuries. In turn, the claimant amended her civil suit complaint against the insured to drop her intentional tort claim and to add claims of negligence and/or reckless conduct, and then entered into a consent judgment with the insured for $350,000 and sought satisfaction from the insured’s homeowner’s carrier, Liberty Mutual. Liberty maintained that the amended complaint attempted to “manufacture” coverage and did not change its position that there was no coverage because the incident was not a covered “occurrence”, i.e., accident, and was excluded by the policy’s “expected or intended” injury exclusion. Relying upon the pleadings and deposition testimony in the claimant’s personal injury action, and the insured’s plea allocution in the criminal case, the United States District Court for the Northern District of New York denied Liberty’s motion for summary judgment, finding that a reasonable jury could conclude that either the insured intended to harm the claimant or that the claimant was injured by the insured’s reckless attempt to protect herself. However, the court found that Liberty complied with New York’s timely disclaimer requirement under New York Insurance Law § 3420(d) because Liberty timely disclaimed and, besides, the “occurrence” requirement is an element of coverage that is not subject to the statute, and the “expected or intended” injury exclusion is not necessarily subject to the statute because the statute only applies to bodily injury claims arising out of an “accident”. [Bunnenberg v. Liberty Mut. Fire Ins. Co., 2024 U.S. Dist. LEXIS 172773 (N.D.N.Y. Sept. 24, 2024).]

Southern District Finds That Insurer’s Retention Of Coverage Counsel Did Not Excuse Untimely Disclaimer Under Circumstances

Builders Choice, a roofing and siding company, retained Exterior Pro as its subcontractor to repair siding and put shingles on roofs at a new condominium construction site. The subcontract required that Builders Choice be named as an additional insured on a primary basis on Exterior Pro’s policy. Exterior Pro’s policy with Evanston Insurance Company included a blanket additional insured endorsement providing additional insured coverage where required by contract, but excluded coverage for injury to employees of the named insured, Exterior Pro. Exterior Pro’s employee was injured while installing shingles at the construction site and sued Builders Choice and others. Builders Choice’s insurer, Admiral Insurance Company, tendered the action to Exterior Pro, who forwarded the tender to Evanston. On December 7, 2020, Admiral received Evanston’s disclaimer letter based on the exclusion for bodily injury to an employee of the named insured (Exterior Pro). In turn, Admiral referred the matter to coverage counsel for review. By letter dated January 7, 2021, thirty-one days after receipt of Evanston’s disclaimer, Admiral disclaimed coverage to Builders Choice based on its breach of the Contractors Conditions Endorsement in its policy requiring that Builders Choice’s subcontractors maintain “adequate insurance” as defined in the endorsement. In the declaratory judgment action that ensued, Admiral’s Senior Claims Superintendent testified that any disclaimer from a subcontractor’s insurer would trigger a violation of the endorsement. Under these circumstances, the United States District Court for the Southern District of New York found Admiral’s disclaimer late and precluded under New York Insurance Law § 3420(d). The court rejected Admiral’s argument that its delay should be excused because it retained coverage counsel given the complexity of the issues, concluding that no further investigation was necessary upon Admiral’s receipt of Evanston’s disclaimer. [Admiral Ins. Co. v. Builders Choice of N.Y., Inc., 2024 U.S. Dist. LEXIS 165618 (S.D.N.Y. Sept. 12, 2024).]