Wednesday, January 14, 2009

Court Upholds Liability Coverage Denial for Accident at Insured Dwelling Where Named Insured Did Not Reside

Tower Ins. Co. of New York v. Monroy

(Sup. Ct., New York Co., decided 12/24/2008)

Most dwelling or homeowners policies exclude liability coverage for bodily injury or property damage "arising out of a premises:
a.  Owned by an 'insured';

b.  Rented to an 'insured'; or

c.  Rented to others by an 'insured';

that is not an 'insured location'[.]"
One would think that the "insured location" is simply that location shown in the policy declarations, but such dwelling and homeowners policies define "insured location" primarily to mean the "residence premises", which itself is defined as the 1-4 family dwelling or other building where the named insured resides and which is shown in the policy declarations as the "residence premises".  So if the residence premises shown in a policy's declarations is owned by or rented to/by the named insured but is not where the named insured resides, will there be liability coverage for injuries or damage that arises from such premises?  No, not if the insurer issues a timely disclaimer based on this premises other than an insured location exclusion.

And such was the outcome in this case.  Fifteen years earlier, Monroy had purchased a home in Brooklyn for his brother who had bad credit.  Although he was the deed owner, Monroy never visited or lived at that home; his brother and brother's family lived there.  Monroy had never performed any maintenance at the property, paid any taxes on the property, made any mortgage payments on the property, or made any insurance payments on the property.  Although all bills relating to the property were in Monroy's name, they went to the Brooklyn home and Monroy relied on his brother to do everything in conjunction with that property.

A woman fell in front of the home and sued Monroy and the City of New York for her injuries.  At the time of that accident, Tower insured the home under a Dwelling Fire Policy that had been transferred to Tower from Empire/All City Insurance, which went into liquidation at the end of 2001.  Tower denied liability coverage to Monroy based on the premises other than an insured location exclusion  and commenced this declaratory judgment action to validate its denial.  Tower and Monroy moved and cross-moved for summary judgment.

In granting Tower's motion, declaring that Tower was not obligated to defend or indemnify Monroy in relation to the underlying personal injury action, New York County Supreme Court Justice Michael Stallman noted the similarity of this case to the facts and decision in Marshall v Tower Ins. Co. of New York (44 AD3d 1014 [2d Dept 2007]), and held:
Defendant‘s argument that the policy covers the address specified in the instrument regardless of whether or not the insured resided there is in direct contravention of the clear statement in the policy. As discussed above, the policy excludes coverage for “bodily injury” and “property damage’’ arising out of an insured’s owned premises that is not an “insured location."  Because Monroy admits that he does not reside at the subject property at issue, it is not an “insured location.”
“Unambiguous terms in a policy of insurance must be given their plain and ordinary meaning and courts may not make or vary the contract of insurance to accomplish their notion of abstract justice or moral obligation [citation omitted] .“
Metropolitan Property & Casualty Ins. Co. v Pulido, 211 AD2d 57, 61 (2d Dept 2000) (interpreting a provision identical to the one in question).
In opposition to Tower's motion, Monroy also argued that Tower could not rely on the premises exclusion because he never received a copy of the policy.  Justice Stallman rejected that argument as both conclusory and illogical, holding:
Defendant’s final argument, that plaintiff cannot deny coverage because defendant never received a copy of the policy, is without merit. Defendant asserts that he would never have agreed to a policy that did not provide coverage. Not only is this statement conclusory on the part of defendant, but the logical outcome of this theory would be that, since defendant never saw the contract, he could not be bound thereby. This would mean that there was no meeting of the minds, so no contract of insurance exists between the parties, defeating defendant's position. See generally Yenom Corp. v 155 Wooster St. Inc., 23 AD3d 259 (lst Dept 2005).
In other words, claiming that certain policy provisions cannot apply because I never received the policy would mean that the entire policy shouldn't apply, in which case there wouldn't be coverage in the first place.

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