New York Insurance Coverage Law Update – July 2022 | Rivkin Radler LLP


The Second Circuit argues that the insurer cannot rely on the exclusions because the waiver was unreasonably delayed when the basis was, or should have been, apparent

In December 2015, Luis Alberto was working on a construction project in a building belonging to the insured when a wall collapsed, causing his fatal fall. In December 2017, Alberto’s estate sued the insured whose insurer, Golden Insurance Company, defended the insured under a reservation of right to decline coverage. The insurer’s January 2018 letter advised the insured that an exclusion for the insured’s work outside a three-story building “likely excluded coverage” but was “unknown to the time “.[at] time” that the insured’s work took place outside the building. The letter also indicated that another exclusion potentially applied. More than two years later, in February 2020, the insurer filed a declaratory judgment action seeking a declaration of non-coverage. The United States Court of Appeals for the Second Circuit upheld the summary judgment granted to the insured on the basis that the insurer had failed to waive coverage in a timely manner as required by insurance law of New York §3420(d), which requires a timely release for claims involving death and personal injury claims arising from accidents in New York and subject to New York liability policies. In finding coverage for the insured, the court found that the insurer unreasonably delayed its waiver after learning of the underlying lawsuit, even though the basis for the waiver was, or should have been, obvious. The Second Circuit rejected the insurer’s argument that it was uncertain whether the accident resulted from work outside the building because the insurer had failed to explain “why anything beyond a cursory investigation was needed to determine “this” crucial – but simple – fact. As to the insurer’s argument that it was obligated to defend the insured even if an outside investigation supported a waiver, the Second Circuit responded that the insurer “does not sufficiently explain why it could not have bring this action for declaratory judgment to waive coverage and end any duty to defend years earlier. [Golden Ins. Co. v. Ingrid House LLC, 2022 U.S. App. LEXIS 16343 (2d Cir. June 14, 2022).]

District Court rules subcontractor’s insurer not obligated to provide additional insured coverage to general contractor for accident involving subcontractor’s employee

Hanjo Construction, a general contractor (GC), subcontractor with Manhattan Steel Design (Sub), who added GC as an additional insured under its policy with United Specialty for bodily injury liability “caused, in whole or in part, by” the acts or omissions of the Processor or those acting on behalf of the Processor. The submarine employee was injured while working on a construction project and he sued the GC. His complaint alleged that he was injured while employed by the submarine when he was struck by an object that fell from an elevated work site and that the GC was negligent and violated employment law from New York. United Specialty denied GC’s claim for additional insured coverage under the subcontractor’s policy, and GC and its insurer filed a declaratory judgment action against United Specialty in the United States District Court for the Southern District of New York. The GC argued that because the complaint and the underlying action brief state that the plaintiff was injured “in the line of duty” for the submarine, the complaint creates a reasonable possibility that the accident was caused nearby by the acts or omissions of the submarine. , triggering United Specialty’s duty to defend. The court rejected this argument and held that the GC was not entitled to additional insured coverage, agreeing with United Specialty that “employing” the injured plaintiff is not sufficient to establish the possibility that the employer caused the injury in the vicinity, further explaining that there is no allegation that the submarine created the conditions which led to the injury or that the submarine was negligent or otherwise responsible for the injury . [Southwest Marine & Gen. Ins. Co. v. United Specialty Ins. Co., 2022 U.S. Dist. LEXIS 110910 (S.D.N.Y. June 22, 2022).]


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