INSURANCE COVERAGE UPDATE Decisions

Transcription

1 Presented for: INSURANCE COVERAGE UPDATE 2016 Top Ten Liability Insurance Coverage Decisions Presented by: Alan C. Eagle, Esq. May 20, 2016

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3 Additional Insured: Backdrop AI coverage for liability arising out of NI s operations broad, fault of NI not necessary AI coverage for liability for BI caused, in whole or in part, by the acts or omissions of NI 1 Additional Insured: 1. Kel Mar Designs, Inc. v. Harleysville Ins. Co. of NY., 127 A.D.3d 662 (1st Dep t 2015) Construction project Sub [NI] obtains AI coverage for GC for liability caused, in whole or in part by Sub s acts or omissions Employee of NI [Sub] falls on stairway GC sued; seeks AI coverage GC defense/indemnity as AI BI to NI s [sub] employee caused, at least in part, by NI s acts or omissions, regardless of fault 2 Additional Insured: 2. Burlington Ins. Co. v. NYCTA., 132 A.D.3d 127 (1st Dep t 2015) NYCTA subway tunnel project Excavator [NI] obtains AI coverage for NYCTA for liability for BI caused, in whole or in part, by Excavator s acts or omissions Excavator hits buried electrical cable; explosion injured worker in area (not employee) NYCTA sued; seeks AI coverage Excavator not negligent; NYCTA failed to mark buried electrical cable Excavator's insurer disclaimed AI coverage on ground that BI not caused, in whole or in part by NI, Excavator s acts or omissions 3 1

4 Additional Insured: 2. Burlington Ins. Co. v. NYCTA., 132 A.D.3d 127 (1st Dep t 2015) NYCTA gets AI coverage even though NI not negligent First Department and S.D.N.Y. precedent where a policy endorsement extends coverage to additional insureds for losses caused by the named insured s acts or omissions or operations, the existence of coverage does not depend upon a showing that the named insured s causal conduct was negligent or otherwise at fault. Enough that injury causally connected to NI s conduct, i.e., NI hit buried electrical cable, which triggered explosion 4 Additional Insured: Bonus HBE Corp. v. Harleysville Group, Inc., 2015 WL (N.D.N.Y. Sep. 30, 2015) (relying upon First Department cases, held named insured s negligence not needed to trigger caused by additional insured coverage) Takeaways Press tenders Consider forum 5 Late Notice: Backdrop New York Insurance Law 3420(a) (c) Liability policies (BI and PD) issued or delivered in NY on or after January 17, 2009 Late notice precludes coverage if insurer prejudiced, i.e., materially impairs the ability of the insurer to investigate or defend the claim 2 years burden shifts from insurer to insured Irrebutable presumption if liability determined 6 2

5 Late Notice: 3. Wausau Underwriters Ins. Co. v. Old Republic General Ins. Co., 2015 U.S. Dist. LEXIS (S.D.N.Y. Aug. 7, 2015) Construction Manager obtains AI coverage for Owner of premises Claimant goes to construction site in October 2012 to meet CM about providing security services; falls entering bathroom Owner learned of possibility of lawsuit in February 2013; sued in May 2013; seeks AI coverage from CM s insurer in July 2013 CM s insurer disclaimed based upon late notice asserting lost opportunity to photograph accident site, interview witnesses and engage in settlement negotiations 7 Late Notice: 3. Wausau Underwriters Ins. Co. v. Old Republic General Ins. Co., 2015 U.S. Dist. LEXIS (S.D.N.Y. Aug. 7, 2015) CM s insurer did not meet burden of proving prejudice Focus is time between February 2013 and July 2013 Rejects insurer s conclusory assertions without evidence Compare Atlantic Cas. Ins. Co. v. Value Waterproofing, Inc., 918 F. Supp. 2d 243 (S.D.N.Y. 2013) (holding insurer prejudiced because accident site destroyed between date insured learned of possibility of claim and notice; lost opportunity to investigate Takeaways Submit evidence Pick battles; test cases 8 Proving Covered/Uncovered Damages: Backdrop Claims where covered and uncovered claims/damages General liability versus professional liability Uncovered damage to insured s own work/product versus third party damage 9 3

6 Proving Covered/Uncovered Damages: 4. Uvino v. Harleysville Worcester Ins. Co., 2015 WL (S.D.N.Y. Mar. 4, 2015) Homeowner hires Construction Manager for project HO sues CM for damage to home CM s insurer defends under ROR Attempts to intervene to request special interrogatories to allocate covered and uncovered damages; request denied HO obtains general verdict against CM and files direct action against CM s insurer 10 Proving Covered/Uncovered Damages: 4. Uvino v. Harleysville Worcester Ins. Co., 2015 WL (S.D.N.Y. Mar. 4, 2015) HO has heavy burden of demonstrating what portion of general verdict was attributable to covered claims; insurer requested special interrogatories Takeaways Get ahead 11 Trigger/Allocation/Noncumulation: Backdrop Long tail claims (e.g. environmental, lead, asbestos) Trigger of coverage property damage or bodily injury during policy period ( injury in fact ) Allocation of damages where injury triggers multiple sequential years/policies all sums or joint and several = insured may pick limits of any triggered policy pro rata = damages allocated over triggered years/policies; insured where uninsured Noncumulation clauses 12 4

7 Trigger/Allocation/Noncumulation: 5. Keyspan Gas E. Corp. v. Munich Reins. Am., Inc., 46 Misc.3d 395 (Sup. Ct. N.Y. Co. Oct. 17, 2014) Keyspan pays ordered environmental clean up costs for historical pollution from (130 years) Seeks declaration that its insurer from (16 years) is obligated to indemnify Insurer argues damages allocated pro rata over entire period during which property damage occurred = 16/130 Keyspan argues not years when pollution insurance unavailable in marketplace 13 Trigger/Allocation/Noncumulation: 5. Keyspan Gas E. Corp. v. Munich Reins. Am., Inc., 46 Misc.3d 395 (Sup. Ct. N.Y. Co. Oct. 17, 2014) Pro rata time on the risk allocation Court of Appeals decision in Consol. Edison Co. of New York v. Allstate Ins. Co., 98 N.Y.2d 208 (2002) No allocation to periods when pollution coverage unavailable in marketplace (except from where excluded by NY statute) 14 Trigger/Allocation/Noncumulation: 6. Nesmith v. Allstate Ins. Co., 24 N.Y.3d 520 (2014) Children of two families exposed to lead paint at same apartment; sue owner alleging injuries over multiple policy periods with same insurer Noncumulation clause single policy limit regardless of the number of injured persons, claims, claimants or policies where injury arises from one accidental loss, i.e., continuous or repeated exposure to the same general conditions Injuries to the children resulted from exposure to same general conditions Recovery limited to one policy limit 15 5

8 Trigger/Allocation/Noncumulation: 7. In re Viking Pump, Inc., 2016 NY Slip Op (N.Y. May 3, 2016) Asbestos claims against insured Primary/umbrella coverage exhausted from Insured seeks excess coverage from various excess policies/insurers from 1972 to 1985 which have noncumulation type clauses Insured argues for all sums /vertical exhaustion approach All sums allocation and vertical exhaustion applies based upon language in policies at issue Noncumulation clauses at issue inconsistent with pro rata Distinguishes Consolidated Edison because noncumulation clauses not at issue 16 BI to Insured Exclusions Backdrop Exclusion for bodily injury to employee of the insured; separation of insureds clause Versus exclusion for bodily injury to employee of any insured or named insured 17 BI to Insured Exclusions 8. Endurance American Specialty Ins. Co. v. Century Sur. Co., 630 Fed.Appx. 6 (2d Cir. 2015) GC added as AI under Sub s policy Exclusion for BI to an employee of named insured BI to employee of Sub; Sues GC GC argues exclusion, when read with separation of insureds clause, does not preclude coverage to GC; BI not to GC s employee 18 6

9 BI to Insured Exclusions 8. Endurance American Specialty Ins. Co. v. Century Sur. Co., 630 Fed.Appx. 6 (2d Cir. 2015) Exclusion precludes coverage bodily injury to employee of named insured, the Sub Distinguishes exclusion for BI to the insured seeking coverage Takeaways N.Y. will enforce policy provisions as written 19 N.Y. Ins. Law 3420(d): Backdrop N.Y. Ins. Law Section 3420(d) New York policies/accidents; BI Timely disclaimer Or lose conditions/exclusions Disclaim to the insured, injured person or other claimant 20 N.Y. Ins. Law 3420(d): 9. Sierra v Sunset Park, LLC, 24 N.Y.3d 514 (2014) Contractor s employee injured on job site; sues Owner Insurer for Owner seeks additional insured coverage for Owner from Contractor s insurer Contractor s insurer sends disclaimer to Owner s insurer 21 7

10 N.Y. Ins. Law 3420(d): 9. Sierra v Sunset Park, LLC, 24 N.Y.3d 514 (2014) Disclaimer invalid not sent to Owner Owner s interests not necessarily the same as its insurer; insurer not its agent Compare City of New York v. W. Heritage Ins. Co., 2015 WL (E.D.N.Y. Apr. 21, 2015) (not a technical trap ; insurer disclaimed to insured that provided notice; not required to send separate disclaimer to other insured with same attorney and interests) 22 N.Y. Ins. Law 3420(d): 10. Key Fat Corp. v. Rutgers Cas. Ins. Co., 120 A.D.3d 1195 (2d Dep t 2014) Construction worker falls from ladder Worker sues Owner, which files third party action against Worker s Employer (Owner Claimant) Employer s insurer disclaims coverage to Employer based upon exclusion for injury to employee Worker obtains judgment against Owner, and Owner obtains judgment against Employer Owner and its insurer file direct action against Employer s insurer seeking coverage for judgment against Employer Owner argues disclaimer invalid as to Owner because didn t get notice as Claimant Employer s insurer argues real party in interest is Owner s insurer so 3420(d) not applicable 23 N.Y. Ins. Law 3420(d): 10. Key Fat Corp. v. Rutgers Cas. Ins. Co., 120 A.D.3d 1195 (2d Dep t 2014) Disclaimer invalid because no notice to Owner, a Claimant Takeaways Disclaim to all insureds, injured persons and claimants 24 8

11 Negligent Handling of Electronic Data 11. Rvst Holdings, LLC v. Main St. Am. Assur. Co., 136 A.D.3d 1196 (3d Dep t 2016) Computer network used by restaurants to store credit card information; hacked Credit card company sues restaurants for negligently handling electronic data Restaurants seek coverage under Coverage A Covers suits for property damage, defined as physical injury to tangible property or loss of use of tangible property that is not physically injured ; policy states that electronic data is not tangible property and excludes [d]amages arising out of the loss of electronic data. 25 Negligent Handling of Electronic Data 11. Rvst Holdings, LLC v. Main St. Am. Assur. Co., 136 A.D.3d 1196 (3d Dep t 2016) Restaurants insurer has no duty to defend or to indemnify Claims not for property damage and excluded Takeaways No opening under Coverage A where electronic data not covered and excluded Battle ground is Coverage B (e.g., publication of material that violates a person s right of privacy ); Cyber policies 26 Personal/Advertising Injury 12. Sportsfield Specialties, Inc. v. Twin City Fire Ins. Co., 116 A.D.3d 1270 (3d Dep t 2014) Insured hires competitor s employee Competitor sues Insured for misappropriations of trade secrets and use of confidential and proprietary information Insured seeks coverage under Coverage B for personal and advertising injury [O]ral or written publication of material that violates a person s right of privacy No coverage Competitor, a corporate entity, not a person and right of privacy not involved 27 9

12 Questions? 28 For More Information Please contact: Alan C. Eagle (516) RXR Plaza, Uniondale, New York