Just in Time for Thanksgiving -- Second Department Recognizes In-Laws as Relatives

HOMEOWNERS – BODILY INJURY TO INSURED EXCLUSION – "RELATIVE" – INSURANCE LAW § 3420(A)(2) ACTION
Smith v. State Farm Fire & Cas. Co.
(2nd Dept., decided 11/18/2008)

Homeowners insurance policies exclude liability coverage for "bodily injury to you [the named insured(s)], and if residents of your household, your relatives, and persons under the age of 21 in your care or in the care of your resident relatives."  The purpose of this "BI to insured" exclusion is to disincentivize collusive lawsuits that target the HO policy and its indemnification dollars.

In-laws are relatives, whether one likes it (or them) or not.  In this case, plaintiff, the daughter-in-law of State Farm's named insured, apparently sued the public administrator of her father-in-law's estate (the named insured presumably having died intestate, i.e., without a will) for personal injuries she had sustained as a result of the named insured's negligence and recovered a money judgment against the estate.  Plaintiff then commenced this action pursuant to Insurance Law § 3420(a)(2) recover that unsatisfied judgment from State Farm under the named insureds' homeowners policy.

In AFFIRMING the Suffolk County Supreme's order granting summary judgment to State Farm, the Second Department held:

On their motion, inter alia, for summary judgment, the defendants State Farm Fire and Casualty Company and State Farm Insurance Companies (hereinafter together the State Farm defendants), made a prima facie showing of entitlement to judgment as a matter of law. The State Farm defendants demonstrated that the plaintiff, the named insureds' daughter-in-law, who resided in the home of the named insureds at the time of the incident giving rise to her underlying personal injury action against the named insureds, was a resident "relative" of the named insureds. Thus, she was within an exclusion from coverage contained in the homeowner's insurance policy State Farm issued to the named insureds (see Korson v Preferred Mut. Ins. Co., 39 AD3d 483, 484; Randolph v Nationwide Mut. Fire Ins. Co., 242 AD2d 889, 889-890; Smith v Pennsylvania Gen. Ins. Co., 32 AD2d 854, affd 27 NY2d 830; Eisner v Aetna Cas. & Sur. Co., 141 Misc 2d 744, 745). In opposition to the State Farm defendants' motion, the plaintiff failed to raise a triable issue of fact (see Alvarez v Prospect Hosp., 68 NY2d 320). To the extent that McGuinness v Motor Veh. Acc. Indem. Corp. (18 AD2d 1100), may be inconsistent with this determination, it should not be followed.

It's the last sentence that caught my eye in this short decision.  McGuinness has been on the books since 1963, the Second Department holding 45 years ago in that case that the undefined term "relative" in an insurance policy was ambiguous and could be construed to be limited to relatives by blood but not affinity.  With the New York courts and Insurance Department now recognizing same-sex marriages performed in other jurisdictions, I guess it was about time for the Second Department to recognize in-laws as relatives.