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Insurance Coverage Update July 2013
Late Notice - Untimely Disclaimer
Under Pre-2008 Policy, Insured's Year-Long Delayed Notice Constituted Late Notice, and Insurer's Year-Long Delay in Disclaiming (Following Prompt Reservation of Rights) Found Timely Under N.Y. Ins. Law § 3420.   U.S. Underwriters Ins. Co. v. Allstate Ins. Co., 2013 U.S. Dist. LEXIS 86367 (E.D.N.Y. June 19, 2013)   The Eastern District of New York ruled that a policyholder's failure to notify its insurer of a claim was untimely, and the insurer's disclaimer was timely, as a matter of law. The insurer brought this declaratory judgment action against its insured and various contractors who allegedly caused extensive damaged through negligent excavation or construction work. The insurer denied coverage based on the insured's failure to provide timely notice and various exclusions. In response, the policyholder argued that its notice was timely, and that the insurer should be estopped from denying coverage due to its year-long delay in issuing a disclaimer. Read the full summary...
Duty to Defend - Advertising Injury
In "Advertising Injury" Dispute, Court Finds Insurer Breached Duty to Defend With Respect to Underlying Trademark Infringement Suit

CGS Indus. v. Charter Oak Fire Ins. Co., 2013 U.S. App. LEXIS 11700 (2d Cir. N.Y. June 11, 2013)

The Second Circuit found that while an insurer wrongfully disclaimed its coverage obligation in connection with an underlying trademark infringement suit, it was not liable to provide indemnification with respect to settlement costs under the "advertising injury" part of a liability policy.
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Property Coverage - Fraud Exclusion
Pursuant to Fraud Exclusion Language, One Policyholder's Fraudulent Conduct Voided All-Risk Policy as to All Named and Additional Insureds. Mon Chong Long Trading Corp. v. Travelers Excess & Surplus Lines Co., 2013 U.S. Dist. LEXIS 92096 (S.D.N.Y. June 27, 2013)   The Southern District of New York determined that a property insurer properly declared its all-risk policy "void" pursuant to the exclusion for "concealment, misrepresentation, or fraud" in connection with claims for property damage stemming from Hurricane Irene. Read the full summary...
Independent Contractors Exclusion
Courts Denies Summary Judgment as Question of Fact Remained as to Injured Party's Status as an Employee of Independent Contractor or Subcontractor. Century Sur. Ins. Co. v All in One Roofing, LLC, 2013 N.Y. Misc. LEXIS 2788 (N.Y. Sup. Ct. July 8, 2013)   A New York County trial court ruled that an insurer was not entitled to summary judgment where it could not show an injured worker was the "employee" of an independent contractor as required to invoke the independent contractors exclusion.
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Occurrence / Asbestos Litigation
Bankruptcy Court's Decision to Preclude Coverage on Late Notice Theory Collaterally Estops Relitigation of the issue.   In re Integrity Ins. Company, 2013 N.J. LEXIS 588 (June 19, 2013)   New Jersey Supreme Court reverses Appellate Division, finding that the principle of collateral estoppel applied to earlier decision precluding coverage on late notice theory. Although Illinois law guides Court's reasoning, the opinion offers direct guidance on level of delay required to support a late notice finding, as collateral estoppel cannot apply if the Court finds its application in a given case unfair.
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Insurer Not Allowed to Pursue Subrogation Against Policyholder's Landlord When Lease Agreement Required Parties to Look Only to Own Insurers for Recovery of Loss
Lig Ins. Co. v. Bonanno Real Estate Group II, L.P., 2013 N.J. Super. Unpub. LEXIS 1660 (App. Div. July 3, 2013)   Appellate Division upholds trial court's refusal to allow insurer to pursue subrogation claim, as tenant policyholder's lease agreement with landlord required that landlord and tenant accept their own losses and obtain insurance containing a clause forbidding subrogation. Read the full summary...


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