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Understanding Insurance Company

Understanding Insurance Company "Disclaimers"

Insurance companies often disclaim coverage, sometimes for legitimate reasons, sometimes not. Insurance is a type of contract, and as such its terms are generally construed quite strictly by the courts. An insurer cannot escape an obligation to cover an insured party without complying with all of the requirements of the policy. Below is a recent example of this lesson from an ongoing federal lawsuit.

City of New York v. Western Heritage Insurance Company

John Battocchio died in May 2010 as the result of injuries suffered in a motor vehicle accident. Battocchio was driving his car in the Bronx and it collided with a dump truck. Battocchio's estate later sued the driver and owner of the dump truck for negligence, as well as the City of New York. The city had contracted with the dump truck's owner to provide landscaping services at the time of the accident.

The truck owner held a $1 million commercial general liability policy. The policy covered the owner and driver. The owner also said pursuant to his contract with the New York City Department of Parks & Recreation, his policy also covered the city as an “additional insured” against the claims made by Battocchio's estate.

The only problem was, the insurance company rejected coverage. The owner's commercial policy contained a specific exclusion for any bodily injury or property damage arising from “the ownership, maintenance, use or entrustment to others of any [auto] owned or operated by” the insured. Notwithstanding this language, the truck owner, the driver and the city filed a separate federal lawsuit against the insurance company, arguing it was obliged to insure the claim filed by the Battocchio estate (which remains pending before Manhattan Supreme Court).

On March 6, U.S. District Judge Raymond J. Dearie partially granted the insurance company's motion for summary judgment. Judge Dearie agreed with the insurer that the language of the auto accident exclusion was clear and unambiguous. There was no question the insurer was not liable for the fatal injuries suffered by Battocchio, even if they were the result of negligence by the insured parties.

That said, the insurance company may not be off the hook. Even where there is a contractual right to do so, New York law still requires an insurer to give written notice “as soon as is reasonably possible” in order to disclaim coverage. This means once the insurer has “sufficient information to disclaim coverage in good faith,” notice must be given; otherwise, the insurer is legally barred from enforcing the disclaimer in a subsequent court proceeding.

Here, Judge Dearie said he could not rule at this time that the insurer had made a timely written disclaimer. Too many facts remain in dispute, he said. For example, the parties disagree as to whether the insurer waited too long to notify the truck owner of its disclaimer. These issues may eventually have to be decided by a jury.

Need Help Dealing With an Insurance Company?

The insurance lawsuit above is secondary to the still-pending negligence case brought by the Battocchio estate. But this seemingly technical argument over the wording of an insurance policy is a useful reminder about the importance of strong legal representation. If you have been in a motor vehicle accident and are dealing with insurance problems of your own, you should have a qualified New York accident attorney working with you to ensure your rights are protected. Contact our office today if you would like to speak with an attorney today.

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