Coverage Pointers - Volume I, No. 8

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Special note for this issue: This issue covers a larger number of cases than usual – however, in keeping with our promise to keep current, we felt it important to present those cases which were decided by the various courts since our last issue two weeks ago. No trees have been killed in sending out this publication!

10/14/99: CASTAGNA v AIEZZA
New York State Supreme Court, Appellate Division, Second Department
Appearing on Certificate of Insurance as a Certificate Holder Provides No Standing To Assert Coverage

In December 1993 the defendant insurer issued a liability insurance policy to the defendant Elk Construction. The plaintiff Castagna entered into a contract with Elk and for renovation work on plaintiff's home. A certificate of insurance issued by the insurer named plaintiff and his wife as certificate holders. The certificate of insurance also contained a disclaimer that it was "issued as a matter of information only and confers no rights upon the certificate holder" and did not "amend, extend or alter the coverage" afforded by the policies named therein. There was no proof in the record that plaintiff was a named additional insured on the policy. In addition, plaintiff, as the injured party, failed to comply with the condition precedent set forth in Insurance Law § 3420(b); namely, he had not obtained an unsatisfied judgment against the alleged wrongdoers on the issue of damages. Not being an insured or a party who had a judgment against an insured, he is prohibited from maintaining a direct action against the insurer.

 

10/4/99: ALLSTATE INS. CO. v. YOUNG
New York State Supreme Court, Appellate Division, Second Department
Insurer’s Failure to Show that Insured was Notified of Amendments to the Policy Held that the Policy Originally Issued Was Still in Effect
In 1990 the insured was in a car accident while driving a vehicle owned by his employer. Insured sought coverage for the accident under a personal liability umbrella policy that he purchased from the insurer in 1983. The insurer denied coverage on the ground that the insured was driving in his professional capacity as a chauffeur, which was excluded under the policy. The insured argued for coverage stating that there was an ambiguity in the terms of the 1983 policy and any ambiguity must be construed against the insurer. The insurer in response argued that amendments made to the policy in 1986 and 1989 corrected any ambiguity in the policy. The insurer claimed that the insured was notified of the amendments by mailings of new policy jackets and explanatory inserts. The insured denied ever receiving the amendatory documents. The Court sided with the insured finding that the 1983 version of the policy was still in effect because the insurer failed to offer competent evidence that the new policy jackets and explanatory inserts were mailed to the insured. The Court then found that the terms of the 1983 policy were ambiguous and the policy afforded coverage to the insured.

10/4/99: CAIATI OF WESTCHESTER, INC. v. GLENS FALLS INS. CO.
New York State Supreme Court, Appellate Division, Second Department
Payments Under Property Policy Not Due Until 30 Days After Appraisal Report – Nor Is Prejudgment Interest

Under loss payment provisions of property policy, an insurance company is not obligated to pay the disputed amount of insured’s loss until 30 days after appraisal award was made. Likewise, prejudgment interest on the appraisal award is not recoverable before the principal is due.

 

10/4/99: UNITED STATES FIDELITY AND GUARANTY CO. v. WEIRI
New York State Supreme Court, Appellate Division, Second Department
Insured Must Demonstrate Prejudice Where a Carrier Delayed in Disclaiming Coverage For Breach of Policy Condition in Cases Neither Death Nor Bodily Injury
In bodily injury and wrongful death cases, because of the provisions of Insurance Law §3420, a liability carrier can lose its right to deny coverage where the insured breaches its obligation to provide timely notice of the accident or lawsuit if the carrier does not promptly disclaim. The doctrine of waiver comes into play. This case holds that in property damage cases, where there is no statutory requirement to deny coverage promptly, a late disclaimer by the insurer for breach of policy condition will not lead to a waiver of that coverage defense unless the insured can demonstrate prejudice as a result of the delay. The Court found that there was an issue of fact whether the insured suffered any prejudice.

10/4/99: GENERAL ASSURANCE COMPANY v. SCHMITT
New York State Supreme Court, Appellate Division, Second Department
Grandson of Insured Residing in Separate Apartment was Not Part of Insured Household
The insurer insured a two-family home owned by Schmitt. The premises had two apartments, which shared a common heating system but had separate utilities, kitchens and bathrooms. Schmitt lived in the first floor apartment while her grandson lived in the second floor apartment. The grandson fell and injured himself on the front stoop of the premises and sued Schmitt, the insured. The insurer denied coverage finding the grandson was also an "insured" under the policy as he was "a resident of [the] household." This homeowner’s policy, like most, excluded bodily injury claims made against one insured by another. The Court found the term household to be ambiguous and concluded that the grandson was not a member of the insured’s household as he paid rent for the apartment and paid separate bills for gas and electric. Therefore, the exclusion did not come into play and Schmitt was entitled to coverage. The Court also found, however, that the insurer did not have to pay the grandson’s medical expenses under the medical payment coverage provision as he was clearly excluded by the terms of that coverage as a person residing "on any part of the insured location."

10/1/99: BENNACER v. TRAVELERS INS. CO.
New York State Supreme Court, Appellate Division, Fourth Department
Ambiguous Binder Affords Coverage for Non-Owned Vehicles Even Where Policy Excludes Coverage; Agent Who Exceeded Authority by Insuring Non-Owned Vehicles Must Indemnify the Insurer
Insurance agent issued a binder to the insured, a pizza shop owner, which covered non-owned vehicles or was ambiguous in this regard. During the 30-day period the binder was effective, plaintiff was injured when struck by a vehicle driven by an employee of the insured. The policy that was later issued excluded coverage for non-owned vehicles. The court held that the insurer was obligated to defend and indemnify the insured because the binder provided coverage for non-owned vehicles or was at least ambiguous in this regard and the ambiguity must be construed against the insurer. The court further held that because the agent exceeded its authority by binding the insurer for non-owned vehicles, the agent is required to indemnify the insurer.

10/1/99: UTICA MUTUAL INS. CO. v. GATH
New York State Supreme Court, Appellate Division, Fourth Department
Claimant’s Independent Right to Provide Carrier with Notice of Claim Requires Independent Disclaimer by Carrier When Notice is Untimely
Claimant was injured while riding her bicycle on the sidewalk in front property owned by the insured, and notified the insured of her intention to file a claim with the insured’s carrier more than two years later. The insured then notified his carrier and forwarded a letter received from the claimant. Thereafter, an action was commenced by the claimant against the insured and claimant’s attorney communicated orally and in writing with the carrier’s representative concerning the incident. The carrier disclaimed coverage based on the insured’s failure to provide timely notice of the claim, but did not disclaim based on the claimant’s untimely notice. The court held that the claimant had an independent right to provide written notice to the carrier and is not bound by the insured’s late notice. Since the carrier disclaimed coverage based only on the insured’s untimely notice, the notice of disclaimer was not effective against the claimant and the carrier was estopped from raising the claimant’s untimely notice as a ground for disclaiming coverage.

10/1/99: MANNING v. PEERLESS INSURANCE
New York State Supreme Court, Appellate Division, Fourth Department
Plaintiff’s Failure to Secure Approval of Workers Compensation Carrier Not Fatal to Settlement
Plaintiff failed to secure the approval of the Workers Compensation carrier before settling his case. The Court noted that the third-party action was settled for the limit of the liability policy and that there was little likelihood of collecting anything in excess of the insurance proceeds from the 24-year-old driver of the other vehicle involved in the accident. It thereby concluded that the workers comp carrier was not prejudiced by the delay in seeking judicial approval and that plaintiff’s papers satisfactorily complied with the statutory requirements

10/1/99: MATTER OF THE ARBITRATION BETWEEN NATIONWIDE INSURANCE COMPANY AND BROWN-YOUNG
New York State Supreme Court, Appellate Division, Fourth Department
Delay In Notifying Underinsured Carrier Excused Where Insured Did Not Know She Sustained "Serious Injury"
Under the SUM policy (underinsurance coverage) an claimant/insured must give its SUM carrier notice "as soon as practicable" as a condition precedent to the carrier’s responsibility. The meaning of the phrase "as soon as practicable" in the underinsurance context means that the "insured must give notice with reasonable promptness after the insured knew or should reasonably have known that the tortfeasor was underinsured" Here, the insured was diagnosed with a cervical strain immediately after the accident. Only years later did she learn from a spine surgeon that she had a more serious disc injury. The Court held that the delay in notifying the SUM carrier of a potential claim was excused because under the circumstances, she had no obligation to notify the carrier until after she realized she had sustained a "serious injury"

ACROSS BORDERS

From time to time we highlight significant cases of interest from other jurisdictions. This week, we offer a decision from Indiana:

10/6/99: CINCINNATI INS. CO. v. WILLS
Supreme Court of Indiana
Use of House Counsel Ruled Ethical
This case deals with the increasingly common practice of defense of claims litigation by insurance company house counsel. The Indiana Supreme Court holds that an insurance company does not necessarily engage in the unauthorized practice of law when it employs house counsel to represent its insureds and that attorneys who are employees of an insurance company do not assist the insurer in the unauthorized practice of law when they represent the insureds. It also finds no inherent conflict in such an arrangement but agree that conflicts may arise. For that reason, among others, accurate disclosure of the arrangement is required.

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REPORTED DECISIONS

CASTAGNA v AIEZZA
In an action, inter alia, to recover damages for negligence and breach of an insurance contract, the defendant Commercial Union Insurance Company appeals from an order of the Supreme Court, Westchester County (Donovan, J.), entered November 2, 1998, which denied its motion for summary judgment dismissing the complaint insofar as asserted against it.

ORDERED that the order is reversed, on the law, with costs, the motion is granted, the complaint is dismissed insofar as asserted against the appellant, and the action against the remaining defendants is severed.

In December 1993 the defendant Commercial Union Insurance Company (hereinafter Commercial Union) issued a liability insurance policy to the defendant Elk Construction (hereinafter Elk). In or about December 1993 the plaintiff Joseph Castagna entered into a contract with Elk and the defendant Sal Aiezza for renovation work on the plaintiff's home. A certificate of insurance issued by Commercial Union named the plaintiff and his wife as certificate holders. The certificate of insurance also contained a disclaimer that it was "issued as a matter of information only and confers no rights upon the certificate holder" and did not "amend, extend or alter the coverage" afforded by the policies named therein.

The Supreme Court erred in holding that the plaintiff presently has standing to either maintain a direct action against the insurer Commercial Union on the insurance contract, or to include Commercial Union in his negligence action against Elk and Aiezza. There was no proof in the record that the plaintiff was a named additional insured on the policy. Therefore, the plaintiff, as the injured party, failed to comply with the condition precedent set forth in Insurance Law § 3420(b), namely, he has not obtained an unsatisfied judgment against the alleged wrongdoers on the issue of damages and, thus, is prohibited from maintaining a direct action against Commercial Union (see, Watson v Aetna Cas. & Sur. Co., 246 AD2d 57, 61; Kaufman v Puritan Ins. Co., 126 AD2d 702).

ALLSTATE INSURANCE COMPANY v YOUNG

In an action, inter alia, for a judgment declaring that a personal liability umbrella policy issued by the plaintiff Allstate Insurance Company to the defendant Eugene Young did not provide coverage for a motor vehicle accident that occurred on May 2, 1990, the plaintiff appeals from so much of an order of the Supreme Court, Nassau County (Alpert, J.), entered April 9, 1998, as denied its motion for summary judgment, and the defendants separately cross-appeal from so much of the order as denied their respective cross motions for summary judgment declaring that the umbrella policy provides coverage for the subject accident.

ORDERED that the order is modified, on the law, by deleting the provisions thereof which denied the respective cross motions of the defendants for summary judgment and substituting therefor provisions granting those cross motions; as so modified, the order is affirmed, with one bill of costs payable by the plaintiff to the defendants, and the matter is remitted to the Supreme Court, Nassau County, for entry of a judgment declaring that the subject policy provides coverage for the May 2, 1990, accident at issue.

On May 2, 1990, the defendant Eugene Young, while driving a vehicle for the defendant Hand Bag Gallery, Ltd., was involved in an accident which resulted in injuries to, among others, the defendant Mara Aguasvivas. Young sought coverage for the accident pursuant to a personal liability umbrella policy that he had purchased from the plaintiff Allstate Insurance Company (hereinafter Allstate) in 1983 which was in effect at the time of the accident. In 1992 Allstate denied coverage on the ground that at the time of the accident Young was driving in his professional capacity as a chauffeur, an alleged exclusion under the policy. Thereafter, Allstate commenced this action for a declaration of the rights of the parties under the policy. After issue was joined, Allstate moved for summary judgment. Allstate argued that the policy, by its terms, did not provide coverage for the accident and that its admitted failure to issue a timely disclaimer did not create coverage. The defendants separately cross-moved for summary judgment declaring that the accident at issue was covered under the subject policy. The court denied Allstate's motion and the defendants' cross motions, finding issues of fact. We now modify.

Allstate is correct that the failure to issue a timely disclaimer does not create coverage where none otherwise exists (see, Handelsman v Sea Ins. Co., 85 NY2d 96; Zappone v Home Ins. Co., 55 NY2d 131; Worcester Insurance Company v Bettenhauser, AD2d [2d Dept., Apr. 12, 1999]). However, on the record presented, it may be determined as a matter of law that the subject policy did provide coverage for the May 2, 1990, accident.

The terms of the policy as it was issued in 1983 were, at best, ambiguous as to whether the May 2, 1990, accident would be covered. Thus, because such an ambiguity must be construed against Allstate, the policy must be deemed to provide coverage for the accident (see, Mostow v State Farm Ins. Cos., 88 NY2d 321). Allstate argued that coverage was nonetheless properly denied because the terms of the subject policy were amended in 1986 and 1989, and that, under the terms of the policy as amended, the accident at issue would not be covered. Allstate asserted that Young was notified of these amendments by various mailings of new policy jackets and explanatory inserts. However, Allstate failed to proffer competent and sufficient evidence that the new policy jackets and explanatory inserts were properly mailed to Young (see, LZR Raphaely Galleries v Lumbermens Mut. Cas. Co., 191 AD2d 680). In his deposition testimony, Young denied having received the amended policy jackets or inserts. Accordingly, it may be determined as a matter of law that the 1983 version of the policy was still in effect and provided coverage for the accident at issue (see, Moore v Metropolitan Life Ins. Co., 33 NY2d 304; Hay v Star F. Ins. Co., 77 NY 235; Couch, Insurance § 29:40 [3d ed]).

Caiati of Westchester, Inc. v Glens Falls Insurance Company

In an action to recover damages for breach of an insurance contract, the defendant appeals (1), as limited by its brief, from so much of an order of the Supreme Court, Westchester County (Rosato, J.), entered June 22, 1998, as granted that branch of the plaintiff's motion which was for interest on an appraisal award as of June 26, 1995, and (2) from a judgment of the same court, dated August 12, 1998, which awarded the plaintiff interest in the principal sum of $65,248.86.

ORDERED that the appeal from the order is dismissed; and it is further,

ORDERED that the judgment is reversed, on the law, so much of the order entered June 22, 1998, as granted that branch of the plaintiff's motion which was for interest on the appraisal award as of June 26, 1995, is vacated, and that branch of the plaintiff's motion is denied; and it is further,

ORDERED that the appellant is awarded one bill of costs.

The appeal from the intermediate order must be dismissed because the right of direct appeal therefrom terminated with the entry of judgment in the action (see, Matter of Aho, 39 NY2d 241, 248). The issues raised on appeal from the order are brought up for review and have been considered on the appeal from the judgment (see, CPLR 5501[a][1]).

Based on the unambiguous terms of the "loss payment" provision of the subject insurance policy, the defendant, Glens Falls Insurance Company (hereinafter Glens Falls), was not obligated to pay the disputed amount of the plaintiff's loss until 30 days after the appraisal award was made. Since Glens Falls timely paid the appraisal award, it did not breach the insurance contract (see, Rubin v Williams, 245 AD2d 181; Catalogue Serv. of Westchester v Insurance Co. of North Amer., 74 AD2d 837; Cohen v New York Prop. Ins. Underwriting Assn., 65 AD2d 71). Moreover, the Supreme Court erred in awarding the plaintiff prejudgment interest on the appraisal award. Interest upon the loss payable under an insurance policy is not recoverable before the payment of the principal is due pursuant to the policy (see, Capizzi v Security Mut. Ins. Co., 254 AD2d 783; Farmland Market Corp. v North Riv. Ins. Co., 105 AD2d 602, 603, affd 64 NY2d 1114; see also, Buttignol Constr. Co. v Allstate Ins. Co., 22 AD2d 689, affd 17 NY2d 476).

UNITED STATES FIDELITY AND GUARANTY CO. v WEIRI

In an action, inter alia, for a judgment declaring that the plaintiff has no duty to defend and indemnify the defendant Franklin Weiri in an action entitled Nyugen v Weiri, pending in the Supreme Court, Queens County, the plaintiff appeals from so much of an order of the Supreme Court, Queens County (Golia, J.), dated July 13, 1998, as denied its motion for summary judgment on the complaint.

ORDERED that the order is affirmed insofar as appealed from, with costs.

The motion for summary judgment was properly denied. The Supreme Court correctly found that although the defendant Franklin Weiri failed to provide his insurer, the plaintiff United States Fidelity and Guaranty Co. (hereinafter USF&G), with timely notice of the occurrence which is the basis of the underlying action against him (see, Rushing v Commercial Cas. Ins. Co., 251 NY 302; Quinlan v Providence Washington Ins. Co., 133 NY 356; Reina v United States Cas. Co., 228 App Div 108, affd 256 NY 537), USF&G's unexplained delay of almost six months in disclaiming coverage was unreasonable as a matter of law (see, Matter of Firemen's Fund Ins. Co. of Newark v Hopkins, 88 NY2d 836; Hartford Ins. Co. v County of Nassau, 46 NY2d 1028). However, because the underlying action does not involve death or bodily injury, USF&G's untimely disclaimer of coverage will be given effect unless Weiri can demonstrate prejudice as a result of the unreasonable delay in disclaiming coverage (see, Incorporated Vil. of Pleasantville v Calvert Ins. Co., 204 AD2d 689, 690; Greater N.Y. Sav. Bank v Travelers Ins. Co., 173 AD2d 521). A triable issue of fact exists as to whether Weiri suffered prejudice as a result of the unexplained delay of USF&G in disclaiming coverage.

 

BENNACER AND MARION MISTRETTA V. TRAVELERS INSURANCE COMPANY AND SOCH INSURANCE AGENCY
Judgment unanimously modified on the law and as modified affirmed without costs and judgment granted in accordance with the following Memorandum: Supreme Court erred in denying the cross motion of defendant Travelers Insurance Company (Travelers) for summary judgment on its cross claims seeking indemnification from defendant Soch Insurance Agency (Soch). Soch issued an insurance binder to plaintiff Kada Bennacer, the owner of a pizza shop. The binder provided coverage for nonowned vehicles, or at least was ambiguous regarding such coverage. The policy that was issued thereafter, however, excluded coverage for nonowned vehicles. During the 30-day period in which the binder was effective, Aaron Mistretta, for whom plaintiff Marion Mistretta is the court-appointed legal guardian, was injured when he was struck by a vehicle driven by Bennacer’s employee. Travelers is obligated to indemnify and defend Bennacer, not because it failed to disclaim coverage in a timely manner as determined by Supreme Court (see, Insurance Law § 3420 [d]), but because the binder provided for coverage of the nonowned vehicle or at least was ambiguous regarding such coverage. Even assuming, arguendo, that the language in the binder is ambiguous with respect to such coverage, we conclude that any such ambiguity must be construed against Travelers and Soch (see, Crouse W. Holding Corp. v Sphere Drake Ins. Co., 248 AD2d 932, 932-933, affd 92 NY2d 1017).

Because Soch, as Travelers’ agent, exceeded its authority by binding Travelers to insure Bennacer for nonowned vehicles, Soch is obligated to indemnify Travelers (see, Fanta-Sea Swim Ctr. v Rabin, 113 AD2d 1011). We therefore modify the judgment by granting Travelers’ cross motion and granting judgment in favor of Travelers declaring that Soch is obligated to indemnify Travelers. (Appeal from Judgment of Supreme Court, Erie County, Glownia, J. - Summary Judgment

UTICA MUTUAL INSURANCE COMPANY V. GATH
Judgment unanimously affirmed without costs. Memorandum: In May 1994 defendant Sue Ellen Misner was injured while riding her bicycle on the sidewalk in front of property owned by defendant Robert Gath. Misner fell from her bicycle when she rode into a piece of rope Gath had extended from a stake in his yard to the telephone pole across the sidewalk. Misner notified Gath in November 1996 of her intention to file a claim with plaintiff, Gath’s insurer. Gath immediately notified plaintiff of the claim and forwarded to plaintiff the letter he received from Misner. In February 1997 Misner commenced a personal injury action against Gath, and in March 1997 her attorney communicated, both orally and in writing, with a representative of plaintiff concerning the incident. Plaintiff disclaimed coverage on the ground that Gath failed to provide timely notice of the claim and thereafter commenced this action in April 1997, seeking a declaration that it has no duty to defend or indemnify Gath in the underlying personal injury action.

Supreme Court properly granted the motions of Gath and Misner for summary judgment, denied plaintiff’s cross motion for summary judgment and declared that plaintiff has a duty to defend and indemnify Gath in the underlying personal injury action. Where an insurer disclaims coverage, "the notice of disclaimer must promptly apprise the claimant with a high degree of specificity of the ground or grounds on which the disclaimer is predicated" (General Acc. Ins. Group v Cirucci, 46 NY2d 862, 864; see, Wraight v Exchange Ins. Co. [appeal No. 2], 234 AD2d 916, 917-918, lv denied 89 NY2d 813). Misner, the injured party, had an independent right to provide written notice to plaintiff and is not bound by Gath’s allegedly late notice (see, General Acc. Ins. Group v Cirucci, supra, at 863-864; Wraight v Exchange Ins. Co., supra, at 917; Walters v Atkins, 179 AD2d 1067, 1068). Although Misner provided such written notice, the notice of disclaimer addressed to Gath, a copy of which was sent to Misner’s attorney, disclaimed coverage based only on Gath’s failure to provide timely notice. That notice of disclaimer is not effective against Misner, and plaintiff therefore is estopped from raising Misner’s alleged failure to provide timely notice of the claim as a ground for disclaiming coverage (see, Eagle Ins. Co. v Ortega, 251 AD2d 282; Wraight v Exchange Ins. Co., supra, at 918; United States Liab. Ins. Co. v Young, 186 AD2d 644, 645, lv denied 81 NY2d 711). (Appeal from Judgment of Supreme Court, Erie County, Notaro, J.

GREGORY F. MANNING V. PEERLESS INSURANCE COMPANY
Order unanimously affirmed with costs. Memorandum: Supreme Court properly exercised its discretion in approving settlement of the third-party action. Although plaintiff failed to obtain the consent of defendant Peerless Insurance Company (Peerless) prior to settling the third-party action, he timely made a motion for a compromise order pursuant to Workers’ Compensation Law § 29 (5). Plaintiff established that the third-party action was settled for the limit of the liability policy (see, Borrowman v Insurance Co. of N. Am., 198 AD2d 891) and that there was little likelihood of collecting anything in excess of the insurance proceeds from the 24-year-old driver of the other vehicle involved in the accident. We conclude that Peerless was not prejudiced by the delay in seeking judicial approval (see, Borrowman v Insurance Co. of N. Am., supra) and that plaintiff’s papers satisfactorily complied with the statutory requirements (see, Merrill v Moultrie, 166 AD2d 392, lv denied 77 NY2d 804). (Appeal from Order of Supreme Court, Onondaga County, Nicholson, J. - Settlement.)

GENERAL ASSURANCE COMPANY v SCHMITT

In an action for a judgment declaring that the plaintiff is not obligated to defend and indemnify Louise Schmitt in an underlying personal injury action entitled Mohr v Schmitt, Index No. 000466/96, pending in the Supreme Court, Queens County, or to pay Brian Mohr's medical expenses under a policy of insurance issued to Schmitt, the plaintiff appeals, as limited by its brief, from so much of an order of the Supreme Court, Suffolk County (Kitson, J.), dated October 1, 1997, as denied its motion for summary judgment declaring that it is not obligated to defend and indemnify Schmitt in the underlying personal injury action or to pay Brian Mohr's medical expenses, and the defendant Louise Schmitt cross-appeals, as limited by her brief, from so much of the same order as denied her cross motion for summary judgment declaring that the plaintiff is obligated to defend and indemnify her in the personal injury action, to pay Mohr's medical expenses, and to pay her costs in defending this declaratory judgment action.

ORDERED that the order is reversed, on the law, with costs to the defendant Louise Schmitt, that branch of the motion which was to declare that the plaintiff is not obligated under the policy at issue herein to pay Brian Mohr's medical expenses is granted, and the motion is otherwise denied, that branch of the cross motion which was to declare that the plaintiff General Assurance Company is obligated under the policy at issue herein to indemnify the defendant Louise Schmitt, up to the policy limits, for her liability in the personal injury action, as well as her reasonable expenditures in the defense of this and the underlying action is granted, and the cross motion is otherwise denied, and the matter is remitted to the Supreme Court, Suffolk County, for entry of an appropriate judgment.

The plaintiff General Assurance Company (hereinafter General Assurance) insured a two-family home (hereinafter the premises) owned by the defendant Louise Schmitt (hereinafter Schmitt) under homeowner's policy number HP 0891940 07. The premises consisted of two apartments which, although they shared a common heating system and mailbox, had separate utility (gas and electric) connections, as well as separate kitchen and bathroom facilities. It is alleged that on August 18, 1995, the defendant Brian Mohr (hereinafter Mohr) fell and injured himself on the front stoop of the premises. At that time, Schmitt lived in the premises' first floor apartment, while Mohr, Schmitt's grandson, lived in the second floor apartment together with his mother, (Schmitt's daughter) formerly Dolores Mohr, now Dolores Rapp (hereinafter Rapp). General Assurance now seeks to disclaim any coverage for a claim made against Schmitt, its insured, by Mohr in an underlying personal injury suit. On General Assurance's motion and Schmitt's cross motion, the Supreme Court found that the policy terms were ambiguous, and therefore summary judgment could not be granted because a question of fact existed as to whether Schmitt reasonably believed that she was obtaining liability coverage for a household that included her relatives living in the second floor apartment of the premises. We disagree.

The insurance policy at issue excludes coverage for "bodily injury to you or an insured within the meaning of part a. or b. of 'insured' as defined". The term "insured" is defined as, inter alia, "residents of your household who are: a. your relatives; or b. other persons under the age of 21 and in the care of any person named above". While the policy defines residence premises as including a two-family house where, as here, it is shown as such on the "Declarations" page, there is no definition of "household" in the policy.

"The law is clear that if an insurance policy is written in such language as to be doubtful or uncertain in its meaning, all ambiguity must be resolved in favor of the insured against the insurer (Hartol Prods. Corp. v Prudential Ins. Co., 290 NY 44, rearg denied 290 NY 744; Ruder & Finn v Seaboard Sur. Co., 71 AD2d 216, affd 52 NY2d 663, rearg denied 54 NY2d 753). The term 'household' has been characterized as ambiguous or devoid of any fixed meaning in similar contexts (see, Hollander v Nationwide Mut. Ins. Co., 60 AD2d 380, 383, lv denied 44 NY2d 646; Aetna Cas. & Sur. Co. v Miller, 276 F Supp 341; Miller v United States Fid. & Guar. Co., 127 NJ Super 37, 316 A2d 51) and, as such, its interpretation requires an inquiry into the intent of the parties (see, Kenyon v Knights Templar & Masonic Mut. Aid Assn., 122 NY 247, 254). The interpretation must reflect 'the reasonable expectation and purpose of the ordinary business man when making an insurance contract' (Burr v Commercial Travelers Mut. Acc. Assn., 295 NY 294, 301) and the meaning 'which would be given it by the average man' (Berkowitz v New York Life Ins. Co., 256 App Div 324, 326; see, Miller v Continental Ins. Co., 40 NY2d 675; Stainless, Inc. v Employers' Fire Ins. Co., 69 AD2d 27, affd 49 NY2d 924). Moreover, the circumstances particular to each case must be considered in construing the meaning of the term (see, Kenyon v Knights Templar & Masonic Mut. Aid Assn., supra; Mazzilli v Accident & Cas. Ins. Co., 35 NJ 1, 170 A2d 800; Cal-Farm Ins. Co. v Boisseranc, 157 Cal App 2d 775, 312 P2d 401)" (Schaut v Firemen's Ins. Co. of Newark, 130 AD2d 477,478-479).

Resolving any ambiguity in the policy in favor of Schmitt, and under the circumstances presented here, it is clear that Mohr was not a member of Schmitt's household. Rapp paid Schmitt rent for the second floor apartment she and Mohr lived in. That apartment also received separate bills for the household gas and electric used by Rapp and Mohr. While Schmitt and Mohr occasionally ate together in Schmitt's apartment and she would occasionally visit her daughter in the upstairs apartment, each apartment had a separate locked inner entrance door which excluded, inter alia, Schmitt from entering at will. Since Schmitt would not have considered Mohr to be a member of her household, she was entitled to coverage for claims for damages due to his bodily injury in this instance (cf., Artis v Aetna Cas. & Sur. Co., 256 AD2d 429; Dutkanych v United States Fid. & Guar. Co., 252 AD2d 537; Kradjian v American Mfrs. Mut. Ins. Co., 206 AD2d 801; Sekulow v Nationwide Mut. Ins. Co., 193 AD2d 395).

However, the policy language defining the limits of the coverage provided for medical payments to others and the exclusions from such coverage is clear. It excludes coverage for the medical expenses of any person regularly residing on any part of the insured location. Since there is no doubt but that Mohr regularly resides in part of the insured location, Mohr is not entitled to recover under that provision of Schmitt's insurance policy.

MATTER OF THE ARBITRATION BETWEEN NATIONWIDE INSURANCE COMPANY AND BROWN-YOUNG
Order unanimously affirmed without costs. Memorandum: Respondent was injured in an automobile accident on October 27, 1995. At that time, she was covered under an automobile policy issued by petitioner with supplemental uninsured motorist (SUM) coverage. Under the SUM endorsement, respondent was required to give notice of a claim "[a]s soon as practicable". Respondent gave notice of her claim under the SUM endorsement on July 17, 1997. Petitioner disclaimed coverage on the ground that respondent had failed to give timely notice, and respondent filed a demand for arbitration. Petitioner then commenced this proceeding seeking a permanent stay of arbitration based upon respondent’s alleged failure to comply with the notice provision, and respondent cross-moved to compel arbitration. Supreme Court denied the petition and granted the cross motion. We affirm.

The provision that notice was to be given "as soon as practicable" was a condition precedent to petitioner’s liability (see, Matter of Metropolitan Prop. & Cas. Ins. Co. v Mancuso, 93 NY2d 487, 492). The meaning of the phrase "as soon as practicable" in the underinsurance context means that the "insured must give notice with reasonable promptness after the insured knew or should reasonably have known that the tortfeasor was underinsured" (Matter of Metropolitan Prop. & Cas. Ins. Co. v Mancuso, supra, at 495). A factor to consider is the seriousness and nature of the insured’s injuries (see, Matter of Metropolitan Prop. & Cas. Ins. Co. v Mancuso, supra, at 494-495; Matter of Travelers Ins. Co. [DeLosh], 249 AD2d 924, 925). Here, respondent was diagnosed with a cervical strain immediately after the accident. Her pain continued and she consulted an orthopedic and spine surgeon in June 1997, who, after reading an MRI, diagnosed a disc injury predominantly in the C5-6 region. We agree with the court that, prior to June 1997, respondent reasonably believed that she had not sustained a "serious injury" (Insurance Law § 5102 [d]). After learning of the seriousness of her injury, respondent promptly commenced an action against the tortfeasor and placed petitioner on notice of a potential SUM claim on July 17, 1997. We conclude that, under those circumstances, notice was given "as soon as practicable".

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