CGL – INSURED PREMISES – PREMIUM AUDIT – ESTOPPEL
Moncrief v. DiChiaro
(2nd Dept., decided 6/24/2008)
Interesting case.
Purchase Land Development Corp. (PLDC) moved to renew its opposition to the previously successful motion for summary judgment of its CGL insurer, Sirius America Insurance Company, declaring that Sirius was not obligated to defend and indemnify PLDC in an underlying personal injury action. Westchester Supreme granted that renewal motion and reversed its earlier award of summary judgment to Sirius. Sirius appealed.
Sirius insured Location "A" under its CGL policy with PLDC. The underlying accident occurred in an unfinished home PLDC was constructing at Location "B". PLDC contended that 4-6 months before the accident, it had instructed its insurance broker to have Sirius add Location "B" to the policy. The broker apparently did not make that request until after the accident date.
In AFFIRMING the order appealed from, the Second Department agreed with the lower court that PLDC had raised a question of fact on coverage by submitting deposition testimony of a vice president of PLDC's insurance broker, that after the policy expired, Sirius audited the policy and thereafter charged PLDC "a premium for all the work associated with [the subject premises]" for the policy period, which included the accident date. Although the broker's VP conceded that the audit may not have specifically listed Location "B" as the property covered under the policy during the policy period, he explained that the coverage was related to PLDC's construction of a home, and during the policy period, the only home owned by and being built by PLDC was located at Location "B".
Based on this testimony, the Second Department concluded: "As such, Sansotta's deposition testimony also raised a question of fact as to whether Sirius may be estopped from denying coverage after it accepted premium payments from PLDC following the audit (citations omitted)."
Another example of what happens when the underwriting and claims departments are out of sync. Moral of the story: Probably not a good idea retroactively to assess and collect premium for risks for which the claims department has already denied liability coverage.
Showing posts with label Designation of Risk. Show all posts
Showing posts with label Designation of Risk. Show all posts
Tuesday, July 1, 2008
Sunday, May 4, 2008
Designation of Risk on Declarations Page Controls
BUILDERS RISK POLICY – FIRE LOSS – OCCUPANCY PERCENTAGE – NOTATION ON DECLARATIONS PAGE – SCRIVENER'S ERROR – REFORMATION
Markotsis v. Zurich Ins. Co.
(Sup.Ct., Nassau Co., decided 4/15/2008)
Plaintiffs loaned Sirgany $330,000 to renovate a 10-unit apartment building. Sirgany obtained a builders risk policy from Zurich for the period May 2005-2006. On the policy's declarations, the box for "commercial structure" was checked, rather than the one for "1-12 Family dwelling". Consistent with the nature and purpose of builders risk coverage, the policy contained a condition that terminated coverage at certain percentages of occupancy: 50% if the property was a "multiple dwelling"; 75% if the property was a "commercial structure". Plaintiffs were listed as additional insureds.
In April, 2006, the building was destroyed by fire. During its investigation, Zurich learned that 60% (6 of 10) of the building's units had been leased, although the insured's public adjuster advised that was not the case. Zurich reserved its rights to deny coverage based on the policy's occupancy condition and continued its investigation. The insured reportedly lost the building in foreclosure in September 2006, the plaintiffs taking a deficiency judgment in excess of the $330,000 debt. Plaintiffs then commenced this action against Zurich in March 2007 for payment of the fire loss under the policy.
The court found that plaintiffs had demonstrated their entitlement to summary judgment by submitting: (1) the executed declarations page which unambiguously depicts the property as a "commercial structure"; (2) portions of the "Builders' Risk Coverage Form" section of the policy, which expressly incorporated into that section "the information contained in the Declarations" page; and (3) "Section E Additional Conditions" which provides that coverage would terminate in connection with a "commercial structure" - undefined in the policy - only "when 75% or more of the square footage space is leased or rented to others".
The court rejected Zurich's argument that the policy's actual coverage terms and provisions superseded the notation on the declarations page, and also rejected Zurich's contention that the "commercial structure" notation was just the "errant check mark" or "scrivener's error" of an underwriter. Notably, Zurich submitted no affidavit from an underwriter to that effect. Based on the lack of any proof that the "commercial structure" notation was a mutual mistake, the court denied Zurich's request for an equitable reformation (re-writing) of the policy. However, given that plaintiffs had not submitted proof of the building's actual occupancy percentage, the court limited its award of summary judgment to the plaintiffs and ordered that discovery proceed.
Markotsis v. Zurich Ins. Co.
(Sup.Ct., Nassau Co., decided 4/15/2008)
Plaintiffs loaned Sirgany $330,000 to renovate a 10-unit apartment building. Sirgany obtained a builders risk policy from Zurich for the period May 2005-2006. On the policy's declarations, the box for "commercial structure" was checked, rather than the one for "1-12 Family dwelling". Consistent with the nature and purpose of builders risk coverage, the policy contained a condition that terminated coverage at certain percentages of occupancy: 50% if the property was a "multiple dwelling"; 75% if the property was a "commercial structure". Plaintiffs were listed as additional insureds.
In April, 2006, the building was destroyed by fire. During its investigation, Zurich learned that 60% (6 of 10) of the building's units had been leased, although the insured's public adjuster advised that was not the case. Zurich reserved its rights to deny coverage based on the policy's occupancy condition and continued its investigation. The insured reportedly lost the building in foreclosure in September 2006, the plaintiffs taking a deficiency judgment in excess of the $330,000 debt. Plaintiffs then commenced this action against Zurich in March 2007 for payment of the fire loss under the policy.
The court found that plaintiffs had demonstrated their entitlement to summary judgment by submitting: (1) the executed declarations page which unambiguously depicts the property as a "commercial structure"; (2) portions of the "Builders' Risk Coverage Form" section of the policy, which expressly incorporated into that section "the information contained in the Declarations" page; and (3) "Section E Additional Conditions" which provides that coverage would terminate in connection with a "commercial structure" - undefined in the policy - only "when 75% or more of the square footage space is leased or rented to others".
The court rejected Zurich's argument that the policy's actual coverage terms and provisions superseded the notation on the declarations page, and also rejected Zurich's contention that the "commercial structure" notation was just the "errant check mark" or "scrivener's error" of an underwriter. Notably, Zurich submitted no affidavit from an underwriter to that effect. Based on the lack of any proof that the "commercial structure" notation was a mutual mistake, the court denied Zurich's request for an equitable reformation (re-writing) of the policy. However, given that plaintiffs had not submitted proof of the building's actual occupancy percentage, the court limited its award of summary judgment to the plaintiffs and ordered that discovery proceed.
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