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07/12/01:         CERUTI v. ABERNATHY

New York State Supreme Court, Appellate Division, First Department

Serious Injury Threshold – Conclusory Report Prepared by Physician who First Examined Plaintiff Two Years After Accident Deemed Insufficient Proof of “Serious Injury”

In this action for personal injuries arising out of a motor vehicle accident, the court held that plaintiff failed to establish “serious injury” as required by Insurance Law §5102(d), and dismissed the complaint accordingly.  Plaintiff’s medical report, which was prepared by a physician who saw plaintiff for the first time after defendants moved for summary judgment, and nearly two years after plaintiff last received treatment relating to the accident, was insufficient to raise an issue of fact as to whether a “serious injury” existed.  Plaintiffs also failed to explain a gap of almost two years between termination of plaintiff's initial course of treatment and the commencement of the present course of treatment.  Moreover, plaintiff’s complaints of neck pain, lower back pain and stiffness and headaches did not constitute “permanent loss of use of a body organ, member, function or system” or “significant limitation of use of a body function or system” under Insurance Law § 5102(d).  Finally, plaintiff’s absence from school for 20 full days and three half-days, and his refraining, on doctor's orders, from participating in physical education for the remaining three months of the school year, did not prevent him “from performing substantially all of the material acts which constitute [his] usual and customary daily activities for not less than ninety days during the one hundred eighty days immediately following” the accident, as required by the statute.

 

07/12/01:         CATALANOTTO v. COMMERCIAL MUTUAL INS. CO.

New York State Supreme Court, Appellate Division, Third Department

Agent Not Liable for Failure to Procure Adequate Coverage Absent Customer’s Specific Request for the Coverage

Plaintiffs sustained property loss when their garage roof collapsed due to accumulation snow and ice.  The parties agreed that the policy covering the property did not cover damage caused by snow and ice loads.  In this action to recover the amount of their loss, plaintiffs’ alleged that their agent was negligent in failing to procure adequate insurance coverage.  The court held that defendant was entitled to a directed verdict at the close of plaintiffs’ proof.  “Under New York law, an insurance agent has a duty to the customer to obtain the requested coverage within a reasonable time after the request or to inform the customer of the agent’s inability to do so, but the agent owes no continuing duty to advise, guide or direct the customer to obtain additional coverage.” In this case, it was undisputed that plaintiffs made no request for coverage protecting against damage caused by the weight of snow or ice, and a generalized request that defendant “cover [them] on everything”, is insufficient.  Furthermore, trial evidence concerning defendant’s deviation from a purported industry standard of informing customers of the advisability of obtaining the “form two” coverage did not constitute prima facie evidence of negligence.  Finally, the trial evidence showed that plaintiffs received the policy before the collapse, thereby giving them “conclusive presumptive knowledge of the terms and limits of [the policy]” and defeating their action as a matter of law.  Judgment in plaintiffs’ favor was reversed accordingly.

 

07/10/01:         ROSNER V. METROPOLITAN PROPERTY AND LIABILITY INS. COMPANY

New York Court of Appeals

A Covered Policy is Issued (in NY) as of its Effective Date of Coverage, Not Date of Execution or Date Policy is sent to Policyholder

After Metropolitan paid Rosner $100,000, the full amount of coverage under the automobile policy, Rosner's guardian initiated a declaratory judgment action seeking a determination that the Mintzes’ personal excess liability policy remained in effect on May 29, 1996, the day of the accident.  Metropolitan contended that the excess coverage policy was properly discontinued on May 25, 1996, just days before the accident.  The District Court held in favor of Rosner, noting that Insurance Law §3425(a)(7) measured mandatory policy periods for personal line insurance policies from the date policies are executed rather than from the effective dates of coverage.  Metropolitan appealed and the United States Court of Appeals for the Second Circuit, finding no definitive judicial interpretation of this section of the Insurance Law, certified the following question to the Court of Appeals: “With reference to the facts of this case, does the phrase ‘the date as of which a covered policy is first issued’ as used in Section 3425 (a)(7) of the Insurance Law refer to (a) the date of execution of the policy; (b) its effective date; or (c) another date?” High court concludes that it is (b) -- the effective date, that is critical.

 

 

ACROSS BORDERS

 

07/20/01:         TOLBERT v. CONNECTICUT GENERAL LIFE INS. CO.

Connecticut Supreme Court

Breach of Contract to Provide Disability Insurance Ripens When Policy Isn't Acquired, Not When Disability Arises or Party Learns Policy Not Obtained

Lending institution was supposed to purchase a policy of credit disability insurance for borrower and did not. More than six years later, borrower became disabled and first learned that the policy was not acquired. The claim against the lender was time-barred.  The six-year statute of limitations contract actions begins to run when the breach occurs, not when the borrower learned that the policy was not purchased.  Since the borrower did not allege a continuing duty to maintain insurance, the claim against lender is dismissed.

 

07/18/01:         NATIONWIDE MUTUAL INS. CO. v. COSENZA

Third Circuit (applying Pennsylvania law)

Exclusion in Auto Policy which Precludes Recovery of Benefits under Both Liability Provisions and Underinsured Provisions Invalid Under Statute

This appeal presents a question of first impression relating to the construction and enforceability of an exclusion in an automobile insurance contract stating that an insured cannot recover benefits under both the liability coverage and the underinsured motorist coverage of the insurance contract.  The Third Circuit held that, on the facts of this case, the “dual recovery” prohibition is invalid and unenforceable pursuant to Pennsylvania's Motor Vehicle Financial Responsibility Law (75 Pa. C.S.A. §1701 et seq.).

 

07/18/01:         NORTHWESTERN OHIO BLDG. & CONSTR. TRADES COUNCIL v. CONRAD

Ohio Supreme Court

Use of Premium Contributions from the State Insurance Fund for Payment of Administrative and Performance Incentive Fees is Constitutional

Use of premium contributions from State Insurance Fund for payment of administrative and performance incentive fees to managed care organizations certified by the Bureau of Workers’ Compensation does not violate Section 35, Article II of the Ohio Constitution.

 

07/12/01:         SYBRON TRANSITION CORP. v. SECURITY INS. OF HARTFORD

Seventh Circuit (applying New York law)

In Asbestos Insurance Case Involving Time-on-the-Risk Approach, Period of Self-Insurance is Considered Period of Coverage

Seventh Circuit struggles with application of New York law in Asbestos Coverage case.  New York federal courts have adopted a “time-on-the-risk” approach to determining coverage responsibility in long-term exposure cases, mandating that each insurer's liability (up to its policy limit) be measured by the underlying loss multiplied by the ratio of time covered by the policy to the time subject to the risk.  The court concluded that an insured's decision not to purchase coverage was, in fact, a decision to pay itself a premium.  Accordingly, self-insurance should be considered insurance.

 

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REPORTED DECISIONS

 

CERUTI v. ABERNATHY

Order, Supreme Court, New York County (Richard Lowe III, J.), entered on or about November 15, 1999, which denied defendants' motion for summary judgment dismissing the complaint, unanimously reversed, on the law, without costs, the motion granted and the complaint dismissed. The Clerk is directed to enter judgment in favor of defendants-appellants dismissing the complaint.

The medical report that plaintiffs submitted, opining that plaintiff had suffered "permanent" injuries in the motor vehicle accident - a report prepared by a physician who saw plaintiff for the first time after defendants moved for summary judgment, and nearly two years after plaintiff last received treatment relating to the accident - was insufficient to overcome the medical evidence that defendants submitted, which indicated that plaintiff's injuries had resolved within about six months after the accident. The physician's diagnostic statements, simply "conclusory assertions tailored to meet statutory requirements," were insufficient to raise an issue of fact as to whether a serious injury exists (Lopez v Senatore, 65 NY2d 1017, 1019). Plaintiffs also failed to explain the gap of almost two years between the termination of plaintiff's initial course of treatment for his injuries and the commencement of the alleged present course of treatment by this physician (Bandoian v Bernstein, 254 AD2d 205, 206). Plaintiff's present complaints, as the physician reported them - some neck pain, lower back pain and stiffness and headaches - do not constitute "permanent loss of use of a body organ, member, function or system" or "significant limitation of use of a body function or system" under Insurance Law § 5102(d) (see, Oberly v Bangs Ambulance Inc., __ NY2d __, 2001 NY LEXIS 1051; Collins v Jost, __ AD2d __, 721 NYS2d 524). Nor do either his absence from school for 20 full days and three half-days or his refraining, on doctor's orders, from participating in physical education for the remaining three months of the school year meet the "serious injury" threshold of § 5102(d) by preventing him "from performing substantially all of the material acts which constitute [his] usual and customary daily activities for not less than ninety days during the one hundred eighty days immediately following" the accident (emphasis added) (see, Licari v Elliott, 57 NY2d 230).

CATALANOTTO v. COMMERCIAL MUTUAL INSURANCE COMPANY

 

Cross appeals from a judgment of the Supreme Court (Leaman, J.), entered May 22, 2000 in Greene County, upon a decision of the court following a bifurcated trial in favor of plaintiffs on the issue of damages.

Plaintiffs, the owners of a seasonal residence with attached garage located in Greene County, sustained a property loss in the winter of 1993 when the roof of the garage collapsed due to the weight of accumulated snow and ice, causing damage to both the structure and its contents. It is undisputed that the insurance policy covering the property, which had been procured through plaintiffs' insurance broker, defendant Marshall & Sterling Inc. (hereinafter defendant), insured against only very limited risks and did not cover damage caused by snow and ice loads. Alleging defendant's negligence in failing to procure adequate insurance coverage for them, plaintiffs brought this action to recover the amount of their loss from defendant.

A jury trial was first conducted on the issue of liability. At the close of plaintiffs' proof, defendant moved for a directed verdict based upon plaintiffs' failure to present evidence of any specific request by plaintiffs that defendant procure coverage protecting against damage caused by the weight of snow and ice (see, Murphy v Kuhn, 90 NY2d 266; Madhvani v Sheehan, 234 AD2d 652). Supreme Court (Connor, J.) denied the motion and the jury ultimately rendered a verdict finding that defendant was "negligent in not procuring for the plaintiffs an insurance policy which provided for the peril of damage resulting from weight of the snow and ice", that such negligence was "a substantial factor in causing a loss to plaintiffs by failing to have coverage under their insurance policy", but that plaintiffs were also "negligent in not informing [defendant] as to what coverage they desired in regards to [sic] the damages they subsequently sustained resulting from weighted snow and ice", which negligence was a substantial factor in bringing about their loss. The jury apportioned liability 35% to defendant and 65% to plaintiffs.

Thereafter, the matter proceeded to trial on the issue of damages, conducted without a jury before Supreme Court (Leaman, J.) by stipulation of the parties. Supreme Court determined that, because of plaintiffs' failure to present evidence concerning the availability of the more comprehensive "form two" insurance to insure "the extensive and eclectic collection of artifacts stored by the plaintiffs in the subject garage" or, if available, the cost of such insurance, the record did not support an award for damage to the contents of the garage. Supreme Court established the damage to the structure at $70,000, reduced to $24,500 by reason of plaintiffs' proportionate culpability. Judgment was entered for that amount, togther with interest, costs and disbursements. The parties cross-appeal.

As a threshold matter, we are unpersuaded by plaintiffs' contention that, by failing to perfect its appeal from an April 7, 1999 judgment for costs and disbursements to plaintiffs following the liability phase of the trial, defendant was somehow precluded from thereafter contesting the jury's verdict on the issue of defendant's proportionate liability. Contrary to plaintiffs' assertion, as well as the language of the notice of appeal giving rise to it, the judgment entered April 7, 1999 was a mere money judgment. Further, had an interlocutory judgment or order been entered on the jury verdict, defendant's appeal from the final judgment entered May 22, 2000 would have brought it up for review (see, CPLR 5501 [a] [1]; Siegel, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR C5501:4, at 19), so long as an appeal from that interlocutory order or judgment had not been taken, abandoned, and thereafter dismissed on that basis (see, Rubeo v National Grange Mut. Ins. Co., 93 NY2d 750, 756-757).

On the merits, we agree with defendant's contention that Supreme Court (Connor, J.) erred in denying defendant's motion for a directed verdict at the close of plaintiffs' case. "Under New York law, an insurance agent has a duty to the customer to obtain the requested coverage within a reasonable time after the request or to inform the customer of the agent's inability to do so, but the agent owes no continuing duty to advise, guide or direct the customer to obtain additional coverage * * *" (Wied v New York Cent. Mut. Fire Ins. Co., 208 AD2d 1132, 1133 [citation omitted]; see, Murphy v Kuhn, 90 NY2d 266, 270, supra; Madhvani v Sheehan, 234 AD2d 652, 654, supra; Empire Indus. Corp. v Insurance Cos. of N. Am., 226 AD2d 580, 581). In this case, it is undisputed that plaintiffs made no request for coverage protecting against damage caused by the weight of snow or ice. At best, plaintiffs made a generalized request that defendant "cover [them] on everything", the very kind of request that has been repeatedly held to be insufficient (see, M & E Mfg. Co. v Frank H. Reis Inc., 258 AD2d 9, 12 ["fully insured"]; Madhvani v Sheehan, supra, at 654 ["full coverage"]; Empire Indus. Corp. v Insurance Cos. of N. Am., supra, at 581 ["best available"]; Erwig v Cook Agency, 173 AD2d 439 ["good coverage"]).

Further, given plaintiffs' failure to satisfy the common-law standard, and in the absence of any evidence supporting a "special relationship" theory (compare, Kimmell v Schaefer, 89 NY2d 257, 260), we conclude that trial evidence concerning defendant's deviation from a purported industry standard of informing customers of the advisability of obtaining the "form two" coverage did not constitute prima facie evidence of negligence (cf., AJ Contr. Co. v Trident Mgrs., 234 AD2d 195). In any event, uncontroverted trial evidence showed that plaintiffs received and reviewed the subject policy prior to the time of the collapse, thereby giving them "conclusive presumptive knowledge of the terms and limits of [the policy]" and defeating their action as a matter of law (Rogers v Urbanke, 194 AD2d 1024, 1024-1025).

The parties' remaining contentions need not be considered.

Peters, Spain, Rose and Lahtinen, JJ., concur.

ORDERED that the judgment is reversed, on the law, with costs to defendant Marshall & Sterling Inc., and complaint dismissed.

ROSNER V. METROPOLITAN PROPERTY & LIABILITY INS. CO.

 

GRAFFEO, J.:

 

On May 29, 1996, while walking on a roadway, Israel Rosner was struck by an automobile operated by Charles Mintz and owned by Leddy Mintz. As a result of the accident, Rosner suffered serious head injuries. At the time, Metropolitan Property and Casualty Insurance Company insured the Mintzes under an automobile liability policy with single limit coverage of $100,000. For a number of years previously, Metropolitan also provided a $1,000,000 personal excess liability policy to the Mintzes.

 

After Metropolitan paid Rosner $100,000, the full amount of coverage under the automobile policy, Rosner's guardian initiated a declaratory judgment action in the United States District Court for the Eastern District of New York seeking a determination that the Mintzes' personal excess liability policy remained in effect on May 29, 1996, the day of the accident. Metropolitan contended that the excess coverage policy was properly discontinued on May 25, 1996, just days before the accident. In response to cross motions for summary judgment, the District Court held in favor of Rosner, noting that Insurance Law section 3425(a)(7) measured mandatory policy periods for personal line insurance policies from the date policies are executed rather than from the effective dates of coverage. Metropolitan appealed and the United States Court of Appeals for the Second Circuit, finding no definitive judicial interpretation of this section of the Insurance Law, certified the following question to this Court:

 

"With reference to the facts of this case, does the phrase 'the date as of which a covered policy is first issued' as used in Section 3425(a)(7) of the Insurance Law refer to (a) the date of execution of the policy; (b) its effective date; or (c) another date?"

 

We accepted certification (96 NY2d 727) and now answer that the statutory language refers to the effective date of a policy.

 

At the crux of this controversy lies the effect of statutory language governing the renewal and cancellation of personal lines insurance policies. The answer to the certified question, as noted by the Second Circuit, turns on the interpretation of sections 3425(e) and 3425(a)(7) of the Insurance Law.[1] Section 3425(e) states:

 

"With respect to personal lines insurance policies, no notice of nonrenewal or conditional renewal of a covered policy shall be issued to become effective during the required policy period unless it is based upon a ground for which the policy could have been cancelled."

 

Section 3425(a)(7) defines the "required policy period" for personal lines insurance as "a period of three years from the date as of which a covered policy is first issued or is voluntarily renewed." It is this provision that the Second Circuit found to be unclear. A review of the facts pertinent to the excess liability coverage provided by Metropolitan to the Mintzes illustrates the need to resolve the statutory ambiguity so aptly described by the Second Circuit (see, 236 F3d 96).

 

The Mintzes initial contract with Metropolitan for excess liability coverage became effective May 25, 1988. Pursuant to Insurance Law section 3425(a)(2), Metropolitan had to comply with New York's "required policy period," found in section 3425(a)(7) and thus granted the Mintzes two consecutive one-year renewals of the policy, continuing coverage through May 25, 1991. Upon termination of the first three-year coverage period, Metropolitan agreed to renew the policy with an effective date of May 25, 1991, thereby triggering a second three-year coverage period. A one-year renewal extended coverage from May 25, 1992 through May 25, 1993.

During this policy year, Mr. Mintz's employer instituted a group insurance program known as "METPAY," which allowed employees to purchase insurance at a group-rate discount through payroll deductions. The Mintzes enrolled in METPAY in April 1993 and expected that the METPAY payroll deduction plan would pay the premiums for their excess liability and automobile policies. Due to certain administrative errors by Metropolitan and oversights by the Mintzes, however, the excess liability policy was canceled on July 15, 1993 for nonpayment of premium.[2]

 

In the fall of 1993, the Mintzes contacted Metropolitan regarding the status of their excess liability coverage. Their discussions culminated in Metropolitan issuing a new excess liability policy on October 11, 1993, effective May 25, 1993 through May 25, 1994, thereby providing continuous coverage from the last date the previous excess policy was in effect. Again, pursuant to the three-year required policy period of section 3425(a)(7), the Mintzes and Metropolitan entered into two one-year renewals. Thus, coverage was continued through May 25, 1996, as indicated by the effective dates of coverage set forth in the policy.

 

In February 1996, prior to the expiration of the policy, Metropolitan determined it would not renew the Mintzes' excess liability policy because of "unacceptable liability exposure" due to certain automobile and homeowner's claims filed by the Mintzes. On March 27, 1996, Metropolitan mailed a notice to the Mintzes, informing them that excess liability coverage would cease on May 25, 1996. Mr. Mintz requested that Metropolitan reconsider its decision, but the carrier refused. The parties' Statement of Stipulated Facts in this case indicates that "Mr. & Mrs. Mintz knowingly elected to forego excess liability coverage after May 25, 1996, acknowledging that they understood that as of that date the [excess] policy was cancelled, the Mintzes deciding not to obtain replacement or similar coverage from any other insurers." Four days later, the tragic automobile accident occurred.

 

"[T]he starting point in any case of interpretation must always be the language itself, giving effect to the plain meaning thereof" (Majewski v Broadalbin-Perth Cent. School Dist., 91 NY2d 577, 583). "[M]eaning and effect should be given to all language of a statute * * *. Words are not to be rejected as superfluous where it is practicable to give each a distinct and separate meaning" (Cohen v Lord, Day & Lord, 75 NY2d 95, 100; see also, McKinney's Cons Laws of NY, Book 1, Statutes § 231, at 390). In the absence of any controlling statutory definition, we construe words of ordinary import with their usual and commonly understood meaning, and in that connection have regarded dictionary definitions as "useful guideposts" in determining the meaning of a word or phrase (Matter of Village of Chestnut Ridge v Howard, 92 NY2d 718, 723; see also, McKinney's Cons Laws of NY, Book 1, Statutes §§ 232, 234, at 392, 398).

 

Here, we must determine the meaning of the phrase "the date as of which a covered policy is first issued" as used in section 3425(a)(7). Our analysis focuses on two key terms: "as of" and "issued." The phrase "as of" is frequently "used to signify the effective legal date of a document, as when the document is backdated or the parties sign at different times" (Black's Law Dictionary 109 [7th ed 1999]; see also, Garner, A Dictionary of Modern Legal Usage 80 [2d ed 1995] [same]). Further, "as of is justified only as a device for assigning an event to one time and the report or recognition of it to another" (Follett, Modern American Usage: A Guide 76 [Jacques Barzun ed 1966] [emphasis omitted]). The term "issue" has been defined as "[t]o send out or distribute officially" (Black's Law Dictionary 836 [7th ed 1999]).

 

Using these ordinary understandings of the phrase "as of," and reading section 3425(a)(7) in conjunction with the word "issue," we hold that "as of" refers to a date mutually agreed upon by the parties having some contractual significance, rather than merely referencing the date of an event, such as the execution or delivery of a document. If we were simply to apply the common definition of the term "issue" and hold that section 3425(a)(7) refers to the execution or delivery date, such a result would effectively excise the phrase "as of" from the statute, in derogation of the canons of statutory construction.

 

Plaintiffs argue that the three-year policy period runs from the date a policy is issued by a carrier or when it is delivered to an insured. They contend that their position is supported not only by the plain meaning of the term "issue," but also by the structure of section 3425(a) viewed as a whole. They point to the definitions of "required policy period" for personal lines insurance other than automobile insurance (see, Insurance Law § 3425[a][7]) as compared to automobile insurance (see, Insurance Law § 3425[a][8]). The former measures the three-year term from the date the policy is "first issued" (Insurance Law § 3425[a][7]), while the latter provides for a one-year renewal term to commence from the date the policy "becomes effective" (Insurance Law § 3425[a][8]). Given this difference, plaintiffs contend the Legislature intended that the term for automobile insurance is to begin on the effective date of coverage, while the policy period for personal lines insurance is triggered on the date of execution or delivery of the policy. We disagree.

 

The statutory predecessor to sections 3425(a)(7) and 3425(a)(8) was section 167-a of the Insurance Law. As enacted in 1974, the three-year bar against nonrenewability and cancellation originally applied to all personal lines insurance, including automobile insurance (see generally, L 1974, ch 1072; A Report to Governor Hugh L. Carey and New York State Legislature from Superintendent of Insurance Albert B. Lewis, Personal Lines Insurance: An Evaluation of The Operation of Section 167-a of the Insurance Law [March 1, 1979]). However, in 1979, the Legislature shortened the required policy period for automobile insurance to one year to "encourag[e] insurers to take reasonable underwriting risks without the present fear that errors of underwriting judgment will be burdens on them long after good business sense would dictate their elimination" (Mem of Senator John R. Dunne, 1979 NY Legis Ann, at 415). In creating a new subsection to reflect this amendment affecting automobile liability insurance (now codified at section 3425[a][8]), the Legislature left unchanged the provision at issue in this case (now codified at section 3425[a][7]).

 

Contrary to plaintiffs' contentions, the legislative history accompanying the 1979 amendments weighs against viewing the differences in the phrases employed in sections 3425(a)(7) and 3425(a)(8) as evidencing an intent to establish two different means of measuring required policy periods. The Sponsor's Memorandum states that the purpose of the amendment was "[t]o establish more reasonable provisions for cancellation, non-renewal and conditional renewal of motor vehicle policies" (Mem of Senator John R. Dunne, 1979 NY Legis Ann, at 414).

 

Similarly, the Governor's Approval Memorandum explained that, despite the reduction in the required policy period for automobile liability insurance, "[t]he minimum three year policy period applicable to non-automobile personal lines policies is not altered by this bill" (Governor's App Mem, at 3, Bill Jacket, L 1979, ch 690). Finally, the Superintendent of Insurance stated that the "key terms" of the automobile liability insurance amendment were "essentially the same as those now contained in Section 167-a(1), except that [the] 'required policy period' is one year, rather than three years" (Letter from Superintendent of Insurance Albert B. Lewis to Governor's Counsel, dated June 28, 1979, at 3, Bill Jacket, L 1979, ch 690).

 

There is thus no indication in the legislative history that the beginning point for required policy periods for automobile liability coverage was adjusted from that of other personal lines policies. In fact, the legislative history is clear that the purpose of the amendment was merely to reduce the required policy period for automobile liability insurance policies from three years to one year and not to alter any other aspect.

 

Further, we note that the practical implications of plaintiffs' interpretation of section 3425(a)(7) would run counter to the Legislature's stated intent in enacting the law in 1974. As the Governor's Approval Memorandum of section 167-a stated, the statute's purpose was to "consolidate and simplify provisions of law under which insurers issuing automobile liability insurance policies or other personal lines insurance policies are prohibited from cancelling or failing to renew such policies for a period of 3 years" (Bill Jacket, L 1974, ch 1072, at 21). The Insurance Department submitted a memorandum in support of the bill, noting that its purpose was "to provide a three year period of guaranteed renewability" and to establish "guaranteed continuity of coverage" within that term (Mem of Ins Dept, dated January 24, 1974, Bill Jacket, L 1974, ch 1072, at 13). If the statute is interpreted to designate the date on which a policy was executed or delivered, the three years of coverage will only run concomitantly where the insurer executes the policy on the day that coverage is effective. In instances where the effective date does not coincide with issuance or delivery of the policy, at least three troubling scenarios could develop.

 

First, an insurer could agree to provide coverage beginning on a specified date and accept the premium, but fail to execute or deliver a written policy. In this situation, it is unclear under plaintiffs' analysis how the required policy period would be applied. Second, if a policy were executed or delivered prior to its effective date, the required policy period would expire before three years have elapsed from the commencement of coverage. In other words, the insured could receive less than three years of coverage, a result that would contravene the express legislative purpose of the statute. Third, where -- as here -- a policy was executed or delivered after a stated effective date, an insurer would be required to maintain coverage in excess of three years.

 

Interpreting the statute as we have is consistent with the legislative intent and purpose of this provision. Our view of the statute more accurately reflects the contractual arrangement between insured and insurer, and establishes a date certain upon which the parties can rely. Certainty in policy coverage periods is imperative in the insurance arena for both insureds and insurance companies.

 

Accordingly, the certified question should be answered with option (b): With reference to the facts of this case, the phrase "the date as of which a covered policy is first issued" as used in section 3425(a)(7) refers to the effective date of the policy.

 

* * * * * * * * * * * * * * * * *

 

Following certification of a question by the United States Court of Appeals for the Second Circuit and acceptance of the question by this Court pursuant to section 500.17 of the Rules of Practice of the New York State Court of Appeals, and after hearing argument by counsel for the parties and consideration of the briefs and the record submitted, certified question answered as follows: With reference to the facts of this case, the phrase "the date as of which a covered policy is first issued" as used in Insurance Law § 3425(a)(7) refers to the effective date of the policy.

 

Opinion by Judge Graffeo. Chief Judge Kaye and Judges Smith, Levine, Ciparick, Wesley and Rosenblatt concur.

 

Decided July 10, 2001

 

[1]The application of Insurance Law § 3420 to this action has not been addressed by the parties and is not in issue before us.

 

[2]Metropolitan terminated coverage in accordance with Insurance Law § 3425(c)(2), which articulates the limited grounds for which an insurer may cancel or refuse to renew a policy during the required policy period. Nonpayment of premiums is one such reason.