New York Court Holds Insurer Timely Disclaimed Coverage on Basis of Classification Limitation

by Traub Lieberman Straus & Shrewsberry LLP
Contact

In its recent decision in Black Bull Contr., LLC v Indian Harbor Ins. Co., 2016 NY Slip Op 00002 (1st Dep’t Jan. 5, 2016), the Supreme Court of New York, Appellate Division, First Department, had occasion to consider whether a classification limitation in a general liability policy constitutes an exclusion of coverage subject to New York Insurance Law §3420(d).

At issue in Black Bull was coverage for an underlying personal injury lawsuit brought by an employee of Black Bull who was hurt while performing demolition activities.  The employee sued various other contractors on the project, who then asserted a third-party action against Black Bull.  Black Bull, in turn, sought coverage for the suit under its general liability policy issued by Indian Harbor.

Indian Harbor denied coverage to Black Bull on the basis that demolition work was not among the categories of work identified in the policy’s classification limitation endorsement.  Notably, Indian Harbor’s disclaimer of coverage was sent almost three months after it learned of the basis for denying coverage.  Under New York Insurance Law §3420(d), a disclaimer of coverage for a bodily injury claim on the basis of an exclusion or condition must be issued within a reasonable time, which in some instances can be as little as thirty days.  Thus, to the extent that Indian Harbor’s disclaimer of coverage was governed by New York Insurance Law §3420(d), its disclaimer would be considered ineffective and Indian Harbor would be statutorily estopped from denying coverage.

In considering the issue, the court conceded that Indian Harbor’s disclaimer letters were late under New York Insurance Law §3420(d).  It nevertheless agreed with the trial court that the policy’s classification limitation was not properly considered an exclusion of coverage, but instead defined the activities included within the scope of coverage.  Relying on the decision by the United States District Court for the Eastern District of New York in Max Specialty Ins. Co. v WSG Invs., LLC, 2012 U.S. Dist. LEXIS (E.D.N.Y. 2012), the court explained:

Contrary to Black Bull’s contention, the policy’s CGL coverage form did not define coverage in a broad manner that, but for Endorsement #003, would have included losses arising from activities outside the classifications set forth in the declarations. Rather, as in Max Specialty, the coverage form provides that Indian Harbor “will pay those sums that the insured becomes legally obligated to pay as damages because of bodily injury’ or property damage’ to which this insurance applies” (emphasis added). The coverage form does not purport to fully define the losses “to which this insurance applies,” and Endorsement #003 [the classification limitation endorsement] specifies that the insurance applies only to losses arising from the classifications of operations set forth on the declarations page.

As such, and because New York Insurance Law §3420(d) does not apply to disclaimers of coverage premised on a policy’s scope of coverage, the court agreed that Indian Harbor was not statutorily estopped from denying coverage.  On the contrary, the court agreed that Indian Harbor properly disclaimed coverage on the basis that the policy did not insure demolition activities and that the disclaimer of coverage was issued in a timely fashion as required by New York common law.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Traub Lieberman Straus & Shrewsberry LLP | Attorney Advertising

Written by:

Traub Lieberman Straus & Shrewsberry LLP
Contact
more
less

Traub Lieberman Straus & Shrewsberry LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.