In recent months, New York has engaged in a flurry of lawmaking regarding civil defendants’ obligations to make insurance-related disclosures. This month’s Insurance Coverage Update examines the major provisions associated with this legal change. This post also addresses new case law in New Jersey and Pennsylvania finding, respectively, that inflationary adjustments to renewal policy terms and limits do not amount to fraud and that voluntary policyholder payments to contractual counterparties do not trigger liability coverage.
New York - Insurance Statutes and Regulation - Comprehensive Insurance Disclosure Act
On December 31, 2021, New York Governor Kathy Hochul signed the New York Comprehensive Insurance Disclosure Act (CIDA) into law. The CIDA substantially increases defendants’ mandatory insurance-related disclosures in New York state court civil litigation. The CIDA immediately drew criticism and was amended on February 24, 2022, to limit the required disclosures and clarify the scope of its application.
New Jersey - Fraud/Bad Faith - Renewal Policy Terms
In Trocki v. Penn Nat’l Mut. Cas. Ins. Co. (Feb. 14. 2022), the District of New Jersey granted an insurer’s summary judgment motion seeking dismissal of its policyholder’s fraud claims grounded in the insurer’s alleged use of inflationary adjustments to limits and premiums in renewal policies.
Pennsylvania - Commercial General Liability Coverage - Property Damage Claim
The Third Circuit in Modular Steel Systems Inc. v. Westfield Ins. Co. (3d Cir. Mar. 18, 2022) found no coverage under a commercial general liability policy when the policyholder’s voluntary repair payments following a storm damage loss did not amount to legal damages capable of implicating coverage.