New York Insurance Coverage Law Update – February 28, 2022 | Rivkin Radler LLP

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Changes to New York’s Comprehensive Insurance Disclosure Law

On February 24, 2022, New York’s Comprehensive Insurance Disclosure Act was amended to remove some of the more controversial requirements, including that defendants, third-party defendants, and counter-defendants (the “Disclosure Party”) file insurance claims and information about other lawsuits. which may have eroded the boundaries of policies being developed. The amended law now requires the production of all primary, umbrella and excess insurance policies that can satisfy all or part of a judgment (and certain other insurance information) no later than ninety days after the response in cases opened on or after December 31, 2021. may be produced in place of policies if the parties involved agree. In addition to the policies or statements, the disclosing party must produce contact information for a person responsible for settling the claim, as well as the total limits available under the policies after taking into account any erosion. Disclosure of limits is not an admission of coverage. The disclosing party and its attorney must certify the accuracy of the information provided. The disclosing party must make reasonable efforts to ensure that the information remains accurate and to provide updated information at various times throughout the litigation. Details of the law change can be found at https://www.nysenate.gov/legislation/bills/2021/S7882/amendment/a.

Court Rules Poor Workmanship Claims Do Not Allege Covered “Event”

The owner of a brownstone townhouse in a New York City Landmarks Preservation neighborhood in Brooklyn hired Vema-P to restore the building’s facade to New York City Landmark Preservation Commission (Commission) and Department of Building (DOB). The Commission’s work permit prohibited the use of any coating on the facade of the building. Vema-P violated the ban by applying a coating to the facade. Vema-P attempted to remove the cladding, but this resulted in an uneven facade, additional construction, the presence of scaffolding which would have lowered rental values, and the hiring of another contractor to put the facade back into a Landmark approved condition. The owner sued and obtained a default judgment against Vema-P, then sued Vema-P’s insurer for coverage. Court allowed insurer’s motion to dismiss, finding it ‘well established’ that ‘event’ based commercial liability policies ‘do not insure against manufacturing defects in work product itself, but rather against defects in workmanship in the work product that create legal liability by causing bodily injury or property damage to anything other than the work product. Although the owner alleged that it had been damaged by the negligent work of Vema-P, the court found that the “sum and substance” of the dispute is the owner’s assertion that Vema-P did not carried out the renovation work to the required standard as promised and that a ‘contract default under a construction contract does not convert’ into a covered ‘event’ i.e. an accident , alleging negligent workmanship or construction. The court found that even if there was a covered “event”, various undisputed exclusions would apply. [589 7th St. LLC v. Certain Underwriters at Lloyd’s, 2021 N.Y. Misc. LEXIS 6754 (Dec. 21, 2021, Sup. Ct. N.Y. Cnty).]

US District Court Rules Claim Notes Detectable

LM Insurance Corporation moved to compel Cincinnati Insurance Company to produce its non-privileged claim notes, and Cincinnati opposed the motion arguing that the notes were irrelevant to Cincinnati’s denial of coverage because the The insured of LM is not an additional insured under the Cincinnati policy. The United States District Court for the Eastern District of New York ruled that the notes were discoverable. The court rejected Cincinnati’s argument that the ratings were irrelevant because the political language is unambiguous, finding it a “challenge that goes to eligibility, as opposed to discoverability, especially where, as here, the district judge has yet to rule on the ambiguity”. or clarity of applicable policy language. Thus, the court “exercises[d] its broad discretion” and concluded that Cincinnati had not rebutted the At first glance evidence of relevance. [LM Ins. Corp. v. Safety Nat’l Cas. Corp., 2021 U.S. Dist. LEXIS 228040 (E.D.N.Y. Nov. 29, 2021).]

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