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Coverage Pointers - Volume III, No. 20

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05/02/02:            CONSOLIDATED EDISON OF NEW YORK, INC. v. ALLSTATE

New York State Court of Appeals

New York Court of Appeals Approves Allocation of Indemnity Payments Over Period Property Damage Occurred

In a ruling with immense implications for numerous pending environmental, products and complex commercial coverage disputes, the New York Court of Appeals ruled that a trial court did not err in allocating pollution losses involving the operation of a manufactured gas site over the entire 50 year period in which the site's operation caused property damage. Con Ed brought a declaratory judgment action against 24 insurers that issued CGL policies over a 48-year period demanding defense and indemnity for clean up for a site where the utility had operated a plant. The Court prorated the damages ($51 million) over the number of years alleged in the complaint (50 years) and held that policies that attach at levels about $1.1 million would not be reached even in Con Ed prevailed at trial. While leaving open the issue of defense allocation, the court expressly ruled that pro rata allocation is appropriate for indemnity and that New York law does not support efforts to pick and choose by assigning the insured’s entire loss to a single year based on “all sums” wordings or theories of joint and several liability. The court left open the issue of whether allocation should be undertaken based on the total years of injury (time on the risk); the total available limits (Owens Illinois) or the amount of injury in each year, suggesting that any of these theories would defeat any claim against the excess insurers in this case. The court also left open the issue of what “trigger” is appropriate in such cases. The Court of Appeals also ruled that insured’s have the burden of proving the existence of an “accident” or “occurrence.” The fact that these wordings may have exclusionary effect does not change the fact that this aspect of the policy falls within the insuring agreement for which the insured bears the burden of proof.

 

04/30/02:            PARAMOUNT INS. CO. v. ROSEDALE GARDENS  

New York State Supreme Court, Appellate Division, First Department

Even Without Prejudice, Late Notice of Accident Was Enough to Support Denial of Coverage

Insured argued that notice of the accident was not required because the managing agent reasonably believed that the insured would not be liable for the loss. This precise argument was rejected in other cases -- in light of policy requirement of notice whenever claim may arise, “that a particular occurrence may not in the end result in a ripened claim does not relieve the insured from advising the carrier of that event”. A provision requiring notice when it “appears likely” that a claim will or may involve a policy - a less onerous notice requirement than is involved here – “does not require a probability - much less a certainty - that the policy at issue will be involved.” A reasonable possibility - such that “may exist even though there are some factors that tend to suggest the opposite” - of the policy’s involvement is sufficient to trigger the duty.

 

04/25/02:            MATTER OF GREAT AMERICAN INS. CO. AND TOMAINO

New York State Supreme Court, Appellate Division, Third Department

Where Insurer Denies SUM (UIM) Claim Based on Vehicle Not Listed On the Policy, Disclaimer Must Be Prompt or Coverage Defense Lost

The primary issue presented here was whether petitioner’s policy provided no coverage for the accident, in which case petitioner was not required to issue a timely disclaimer, or whether the lack of coverage was based on an exclusion, which would require a timely disclaimer. As properly contended by respondent, the factual scenario and policy provisions considered by the Court of Appeals in Matter of Worcester Ins. Co. v Bettenhauser (95 NY2d 185) were essentially indistinguishable from this case, compelling the conclusion that, despite the omission of respondent’s vehicle as a “covered auto”, the policy issued by petitioner contemplated SUM coverage in the first instance and the denial of SUM coverage to respondent was based on a policy exclusion. It remains to be determined whether a question of fact exists concerning the timeliness of notice of disclaimer. Insurance Law § 3420 (d) requires an insurer to give written notice of a disclaimer of coverage “as soon as is reasonably possible”, and failure to do so renders the denial ineffective.

 

04/22/02:            AMERICAN BRIDGE CO. v. ACCEPTANCE INS. CO.

New York State Supreme Court, Appellate Division, Second Department

Wrongful Refusal to Defend Imposes Obligation on Carrier to Pay Defense Costs

The Supreme Court correctly determined that Acceptance Insurance Company was obligated to provide the plaintiffs with a defense in the underlying personal injury action, as the allegations in the injured plaintiff’s complaint fall within the scope of the risks undertaken by the insurer. Since Acceptance breached that duty when it failed to provide a defense to the plaintiffs, it was liable for the defense costs previously incurred by the plaintiffs in defending the action. Indemnity issues require fact finding.

 

04/22/02:            ELITE AMBULETTE CORP. v. ALL CITY INS. CO.

New York State Supreme Court, Appellate Division, Second Department

Injury in Wheelchair in Home Doesn’t Arise Out of “Use or Operation”

A vehicle owned by the Elite Ambulette Corp. responded to the home of Labiak to transport him to a medical appointment. Inside Labiak's second-floor apartment, the Elite driver and attendant helped Labiak from his heavy motorized wheelchair into a lighter manual wheelchair provided by Elite, to transport him into the ambulette. This temporary wheelchair provided by Elite allegedly had no rubber on its wheels, and thus the brake levers that normally wedge against the rubber to prevent the chair from rolling were ineffectual. The attendant physically lowered Labiak down a flight of stairs to a first-floor vestibule, which was atop a second, shorter flight of stairs. Hill then left Labiak in the vestibule in the temporary wheelchair, while he went back upstairs to retrieve the motorized wheelchair, which he was also to transport. While Labiak waited in the vestibule, the temporary wheelchair began rolling forward. He tried to apply the brakes, but they were useless and Labiak rolled down four or five steps to a landing, where he fell from the chair and was injured. Labiak commenced the underlying action against Elite and the attendant. Elite forwarded copies of the summons and complaint to All City Insurance Co., which insured Elite’s vehicles for liability “resulting from the ownership, operation, maintenance [or] use” thereof. All City disclaimed coverage on the ground that the accident did not arise from “the ownership, maintenance or use” of a covered ambulette, but due to a fall from an unattended wheelchair that was nowhere near the covered vehicle. Elite thus commenced this action for a judgment declaring All City’s duty to provide defense and indemnification in regard to Labiak's claims. As alleged in his complaint in the underlying action, Labiak's injuries occurred inside his home, as a result of a defective wheelchair and a careless attendant. The covered ambulette parked outside was not in any way involved in the accident. While the terms “use and operation” do include acts of loading and unloading, the accident here occurred away from, and incidental to, the covered vehicle. Where coverage is provided for use and operation of a vehicle, to invoke an insurer’s duty to defend and/or indemnify, the use of the motor vehicle must be more closely related to the injury. Because the accident was not the result of any act or omission related to the use of the vehicle, the Supreme Court properly declared that All City was not obligated to defend and indemnify Elite.

 

04/22/02:            UTICA MUTUAL INS. CO. v. TIMMS

New York State Supreme Court, Appellate Division, Second Department

Despite Fraud in Liability Policy, Insured Still Entitled to No-Fault Benefits

Plaintiff commenced this action for judgment declaring that, based upon the submission of a fraudulent insurance claim by the defendant Powell, it was not obligated to provide no-fault coverage or to defend Powell in an underlying action. Powell notified the plaintiff that he was involved in an automobile accident and that Timms and Keels were passengers in his vehicle. After a hearing, a judicial hearing officer determined, inter alia, that Keels was not a passenger in the defendant’s vehicle. Contrary to the plaintiff’s contention, the defendant’s fraudulent conduct did not vitiate the no-fault portion of the policy. “[T]he ‘no-fault’ endorsement is ‘internally complete and a distinct part of the insurance policy. The coverage provided for in the [no fault] endorsement cannot be qualified by the inapplicable conditions and exclusions of the liability portion of the policy.’”

 

04/22/02:            MATTER OF MERCHANTS MUTUAL INS. CO. v. FALISI

New York State Supreme Court, Appellate Division, Second Department

SUM Arbitration Not Stayed Where Insurer Didn’t Raise Late “Lawsuit Notice” Breach But Arbitration Stayed Anyway Because of Insured's Late Notice of Claim

The insureds correctly argued that their supplementary uninsured motorist (SUM) arbitration claim couldn’t be stayed because they violated a policy provision requiring prompt notice of the legal action they commenced against the driver of the allegedly offending vehicle. Their insurer, Merchants, did not include that ground in its letter of disclaimer. Thus, it waived any right to assert that ground in its petition to stay arbitration as a basis for denying coverage. Nevertheless, affirmance of the judgment staying arbitration was warranted. Merchants properly disclaimed coverage due to the appellants’ demonstrated failure to provide notice and proof of their SUM claim as soon as practicable, as required by the policy.

 

ACROSS BORDERS

 

Visit the HOT CASES section of the Federation of Defense and Corporate Counsel website for cases covering a broad range of legal issues from other jurisdictions:  www.thefederation.org.

 

05/01/02:            RULES REGULATING THE FLORIDA BAR

Florida Supreme Court

Florida Adopts Rules Relating to Relationship of Insurer-Selected Defense Counsel and Client

The Florida Supreme Court has adopted rules relating to the relationship of attorneys hired by insurers to defend insured with their client. Floridians must now be informed of a wide variety of matters that were not previously mandated by rule. Lawyers hired by insurance companies to defend policyholders must give the policyholders a 2 1/2-page Statement of Insured Client’s Rights. The document spells out the policyholder’s rights and explains the ethically three-way relationship among the lawyer, the policyholder and the carrier. See Rule 4-12.8(j).

 

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REPORTED DECISIONS

 

PARAMOUNT INS. CO. v. ROSEDALE GARDENS, INC.

 

SULLIVAN, J.

 

In this action testing the validity of a disclaimer of coverage based on late notice of claim, Paramount Insurance Company, which insured defendant Rosedale Gardens, Inc. under a general liability policy and an umbrella policy for negligence claims arising out of Rosedale's ownership, operation and control of a residential building at 1810 Bruckner Boulevard in the Bronx, appeals from the denial of its motion for summary judgment for a declaration in its favor.

 

It is undisputed that no notice was given to Paramount until the commencement of a lawsuit against it for personal injuries sustained in the accident giving rise to the claim, which had occurred more than seven months earlier. The notice provisions in the primary and umbrella policies are essentially identical. The primary policy provides, "You must see to it that we are notified as soon as practicable of an 'occurrence' or an offense which may result in a claim." Although not defined in the primary policy, "occurrence" was defined in the umbrella policy as, "With respect to bodily injury..., an accident, including continuous or repeated exposure to substantially the same general harmful conditions."

 

Rosedale is a residential cooperative corporation, and Arco Gold Management, Co., Inc., impleaded by Rosedale as a third-party defendant, was, at all relevant times, its managing agent. [*3]Jose and Miriam Escobar, husband and wife and residents of Rosedale Gardens, are also named defendants. They are also the plaintiffs in the underlying personal injury action, which arises out of Mr. Escobar's slip and fall down a third-floor stairway at the premises on the afternoon of May 16, 1999.

 

After the fall, Mrs. Escobar summoned an ambulance, which transported Mr. Escobar to the hospital, where he was diagnosed with an ankle fracture, admitted and kept for six days. Mr. Escobar was released from the hospital with a cast on his leg and with a walking device. Later, on the same day as the accident, Mrs. Escobar called Rosedale's emergency number and reported the accident. Thereafter, she spoke with Rosedale's superintendent, Kungel Persaud, and advised him that Mr. Escobar "had tripped and fell down the stairs" and had been taken by ambulance to the hospital. Mrs. Escobar showed Persaud the stairway where Mr. Escobar had tripped and fallen. Although Mrs. Escobar had observed sunflower seeds when she first saw the stairway after Mr. Escobar's fall, the seeds were not there when she showed Persaud the site of the fall; nor did she tell Persaud about the seeds. At various times after his discharge from the hospital, Mr. Escobar, in a cast and using his walking device, would meet Persuad on his way to a doctor's appointment.

 

On May 17, 1999, Persaud, as he was required to do, notified Arnold Cohen, Arco's site manager at Rosedale Gardens, of the accident. According to Persaud, he advised Cohen that Mr. Escobar had been taken by ambulance from the scene. Cohen has confirmed that on May 17, 1999 Persaud notified him of the accident and, in two signed statements taken prior to his deposition, admitted that he had been advised that an ambulance had been called. In his deposition taken on January 23, 2001, however, Cohen denied ever being informed that an ambulance had been called.

 

Cohen testified that it was company policy that if an accident occurred within the building he would investigate and determine whether the insurance broker should be notified. In the instant case, notice was not given because after Cohen spoke with the superintendent and examined the staircase, he "didn't see or hear any further substantiation of anything having [*4]occurred." Moreover, Cohen testified that in 1998, the Escobars had made unsubstantiated complaints that their child had been the victim of lead poisoning. Thus, he explained, he had reason to doubt the validity of the Escobars' claims, particularly since, after the accident, the possibility of a lawsuit was never raised.

 

Almost seven months later, by a summons and complaint dated December 1, 1999, the Escobars commenced an action to recover damages for Mr. Escobar's personal injuries and Mrs. Escobar's loss of services. Rosedale forwarded the summons and complaint to its insurance broker, which, in turn, forwarded them to Paramount with a request for a defense and indemnification under the policies. Paramount's receipt of process on January 3, 2000 constituted its first notice of the claim. It thereafter conducted an independent investigation by an outside agency, which included obtaining a signed, written statement from Cohen acknowledging that he knew of the slip and fall on May 17, 1999 and that he forgot to report the incident to the insurance broker. As a result, by letter of February 1, 2000, Paramount disclaimed coverage on the basis of lack of timely notice, advising Rosedale that it would commence a declaratory judgment action, which it did on February 4, 2000, naming Rosedale and the Escobars as defendants, to determine the rights and obligations of the parties under the policies. As noted, Rosedale commenced a third-party action against Arco, alleging that if Paramount were successful in its assertion of late notice as a bar to a defense and indemnification under the policies, the cause of such breach of policy conditions would have been Arco's failure to give timely notice of the accident to Paramount.

 

After discovery, Paramount moved for summary judgment, arguing that the seven-and-one-half month delay in notifying it of the accident constituted untimely notice as a matter of law. In opposition, Rosedale argued that a factual issue existed, citing Cohen's deposition testimony that he did not believe that the Escobars would commence a lawsuit or that the accident, if indeed it occurred, presented a liability situation, given that, on his post-accident inspection, he apparently found no defect or dangerous condition. The motion court denied Paramount's motion, [*5]finding "very pronounced issues of fact" with respect to whether the belief, undoubtedly that of Arco, acting for Rosedale, that the Escobars would not sue, was reasonable.

 

Following the denial of summary judgment, Rosedale moved pursuant to CPLR 510(3) to change the venue of this action from New York to Bronx County, where the Escobar action is pending, arguing that "the ends of justice would be best promoted by both matters being resolved in the same court." Paramount opposed the motion, arguing that the adjudication of the coverage question would have no bearing on the resolution of the Escobars' negligence action. The motion court granted the change of venue and directed that the declaratory judgment action and the Escobar person injury action be tried jointly, holding that "the facts in the underlying action will affect the determination as to whether or not there is coverage...or whether [Paramount] should be entitled to disclaim coverage." The court justified its order directing a joint trial with the observation "[t]hat's the whole reason it is being sent there, otherwise it would be a ridiculous thing to send it there and not have it consolidated [sic] with the other case." Paramount has taken an appeal from the denial of summary judgment in its favor and the change of venue. We reverse both orders.

 

It is well settled that compliance with an insurance policy notice provision operates as a condition precedent to coverage. (White v City of New York, 81 NY2d 955, 957; Security Mut. Ins. Co. v Acker-Fitzsimons Corp., 31 NY2d 436, 440.) Absent a showing of legal justification, the failure to comply with the notice condition vitiates coverage. (Matter of Allcity Ins. Co. [Jiminez], 78 NY2d 1054, 1055.) The obligation to give notice "as soon as practicable" of an occurrence that may result in a claim is measured by the yardstick of reasonableness. (875 Forest Avenue Corp. v Aetna Cas. & Surety Co., 37 AD2d 11, 12, affd 30 NY2d 726.) It has generally been held that a failure to give notice may be excused when an insured, acting as a reasonable and prudent person, believes that he is not liable for the accident. (Id. at 12-13.) It is clear from this principle that, in assessing the timeliness of the notice given, the courts have not turned over to the insured, or its agents, the exclusive [*6]responsibility for determinating when an accident is likely to give rise to a liability claim.

 

The duty to give notice arises when, from the information available relative to the accident, an insured could glean a reasonable possibility of the policy's involvement. (See, Security Mut. Ins. Co. v Acker-Fitzsimons Corp., supra, 31 NY2d at 441-43; Haas Tobacco Co. v American Fidelity Co., 226 NY 343, 346-47; Woolverton v Fidelity & Cas. Co., 190 NY 41, 48.) Moreover, knowledge of an occurrence obtained by an agent charged with the duty to report such matters is imputed to the principal. (See, White v City of New York, supra, 81 NY2d at 958.) It also bears noting that the insured bears the burden of proving, under all the circumstances, the reasonableness of any delay in the giving of notice. (See, Argentina v Otsego Mut. Fire Ins. Co., 86 NY2d 748, 749.)

 

Rosedale argues that notice of the accident was not required because Arnold Cohen, the managing agent, reasonably believed that Rosedale would not be liable to the Escobars. This precise argument was rejected in Heydt Contracting Corp. v American Home Assur. Co. (146 AD2d 497, 499, lv dismissed, 74 NY2d 651 [in light of policy requirement of notice whenever claim may arise, "that a particular occurrence may not in the end result in a ripened claim does not relieve the insured from advising the carrier of that event"]). In Christiana General Ins. Corp. v Great American Ins. Co. (979 F2d 268, 276), the Second Circuit held that a provision requiring notice when it "appears likely" that a claim will or may involve a policy - a less onerous notice requirement than is involved here - "does not require a probability - much less a certainty - that the policy at issue will be involved." The Court held that a reasonable possibility - such that "may exist even though there are some factors that tend to suggest the opposite" - of the policy's involvement is sufficient to trigger the duty. (See, State of New York v Blank, 27 F3d 783, 794 [2d Cir] [insurance policy notice requirements strictly enforced].)

 

Similarly here, the requirement of prompt notice of any occurrence that "may result in a claim" should not be interpreted in a way that the insurer is compelled to relinquish its right to [*7]prompt notice and all the benefits that accrue therefrom - a timely investigation and the opportunity, if appropriate, to dispose of the claim in its early stages, an opportunity that might be irretrievably lost in the case of delayed notice - by placing undue emphasis on the liability assessment of one not trained or even knowledgeable in such matters.

 

The point is aptly illustrated in this case. Both Messrs. Persaud and Cohen observed the stairway where the accident occurred sometime after its happening. That the condition complained of as the cause of the fall, i.e., the presence of sunflower seeds on the stairway, a highly transient condition, was not present at the time of their respective inspections, one of which could not have taken place, at the earliest, until a day after the accident, is hardly surprising and of little or no overall significance in any assessment of the likelihood of a claim. The other factor cited, that the Escobars had a year earlier asserted an allegedly meritless claim of lead poisoning, never pursued, does not even logically support the decision to forego notice. To the prudent insured, it would seem that this circumstance should have had the opposite effect. In any event, suffice it to say, the notice requirement does not exempt occurrences, which, in the insured's estimation, do not portend probable liability on its part, as Rosedale's argument seems to suggest.

 

While an insurer need not show prejudice to sustain a coverage disclaimer on the basis of late notice, here, Paramount is able to make such a showing. Mr. Escobar has testified that he hired an attorney only after he failed to hear from any Rosedale representative after the accident. Thus, the delay in notice had a clear impact on Paramount's ability to investigate and dispose of the claim at an early stage. This lost opportunity, not easily quantifiable, is, no doubt, a factor in the rationale that underlies the strict enforcement of the notice condition in liability insurance policies.

 

In the instant matter, it is beyond dispute that Persaud, on May 16, 1999, knew of the accident and that Mr. Escobar had been taken by ambulance to the hospital. The latter circumstance is a significant factor in determining the reasonableness of any delay [*8]in giving notice. (See, e.g., Zadrima v PSM Ins. Cos., 208 AD2d 529, 530, lv denied 85 NY2d 807 [four month delay in notifying insurer of accident inexcusable as matter of law where insured knew that injured party was transported to hospital by ambulance after accident].) According to Mr. Escobar, Persaud learned shortly after his return from the hospital one week after the accident that Escobar's leg was in a cast and that he required a walking device. Unlike the situation in Nalea Realty Corp. v Public Service Mut. Ins. Co. (238 AD2d 252, lv dismissed, 90 NY2d 927), Persaud's agency obligations included the handling of such information.

 

Nor was Rosedale's duty to report the accident to Paramount discharged by Persaud's notification to Cohen of Arco, Rosedale's managing agent. Whatever may have been the arrangement between Rosedale and Arco as respects the reporting of such incidents, it is not binding on Paramount, which, pursuant to the policy's terms, was entitled to notice "as soon as practicable" from the insured or anyone acting for it. In that regard, Cohen, as he admits, knew of the accident the day after it occurred. And, despite a post-litigation assertion to the contrary, in written statements given after the accident he admitted knowing that Mr. Escobar was taken from the scene by ambulance to the hospital. In any event, as far as Rosedale's obligation to give notice is concerned, it is Persaud's knowledge that is determinative and on that issue there is no dispute. None of the extenuating circumstances that have led the courts to conclude that the insured acted reasonably in believing that liability would not result are present here. (See, e.g., Argentina v Otsego Mut. Fire Ins. Co., supra, 86 NY2d 748 [close familial relationship between accident victim and insured and lack of knowledge of permanent injury]; D'Aloia v Travelers Ins. Co. (85 NY2d 825 [injured party's parents declined the insured's offer to pay medical expenses]) and Merchants Mut. Ins. Co. v Hoffman (56 NY2d 799 [action by foster child against foster parents after former reached majority where child's medical bills had been paid by Department of Social Services].) Since Rosedale, through its own superintendent and its on-site managing agent, had immediate notice of the Escobar accident and injury and failed to report [*9]the accident promptly to Paramount, it has failed to comply with a condition to coverage, which justifies the disclaimer.

 

The resolution of the coverage issue in Paramount's favor renders largely academic the motion court's grant of a change of venue and direction of a joint trial, which was erroneous as a matter of law even had the summary judgment motion been correctly decided. Contrary to the motion court's preference for the joint disposition of coverage and liability issues, disparate issues to be sure, "[i]t is generally recognized that, even where common facts exist, it is prejudicial to insurers 'to have the issue of insurance coverage tried before the jury that considers the underlying liability claims'" (Medick v Millers Livestock Market, Inc., 248 AD2d 864, 865, quoting Schorr Bros. Dev. Corp. v Continental Ins. Co., 174 AD2d 722; see, Kelly v Yannotti, 4 NY2d 603.)

 

Moreover, although the ruling had its basis in the court's notions of practicality and expedience, it was premised, legally, on CPLR 510(3), which allows for a change of venue when "the convenience of material witnesses and the ends of justice will be promoted by the change." In its moving papers, Rosedale was unable to identify a single witness, much less a material witness, who was unavailable to testify in New York County, as opposed to Bronx County. Nor was any information furnished to elucidate counsel's statement in support of the motion that the ends of justice would be promoted by a change of venue.

 

Accordingly, the order of Supreme Court, New York County (Barbara Kapnick, J.), entered October 2, 2001, which, to the extent appealed from, denied plaintiff's motion for summary judgment, should be reversed, on the law, without costs or disbursements, the motion granted and a declaration made that plaintiff has no obligation to defend or to indemnify defendant Rosedale Gardens, Inc. against the claim asserted by the defendants Escobar in the underlying action pending in Supreme Court, Bronx County. The order of the same court and Justice, entered November 1, 2000, which, inter alia, granted the motion of defendant Rosedale Gardens, Inc. for a change of venue, should be reversed, on the law, the facts and in the exercise of [*10]discretion, without costs or disbursements, and the motion denied.

 

All concur.

 

MATTER OF GREAT AMERICAN INS. CO. and TOMAINO

 

Mercure, J.P.

 

Appeal from an order of the Supreme Court (Dowd, J.), entered March 26, 2001 in Otsego County, which granted petitioner's application pursuant to CPLR 7503 to stay arbitration between the parties.

 

On July 5, 1998, while operating his 1997 Toyota automobile, respondent was involved in a collision with a vehicle owned and operated by Kenneth Vervalin. At the time of the accident, respondent had in effect a Liberty Mutual Insurance [*2]Company automobile policy covering his vehicle, as well as a commercial automobile policy issued by petitioner covering the three vans respondent used in his bakery business. On August 12, 1998, respondent advised petitioner that his injuries may exceed available insurance policy limits and that notice was being given under the appropriate underinsured motorist or supplemental personal injury protection provisions of his policy. Petitioner responded by letter dated August 21, 1998, stating that there was "no valid underinsured claim" and that respondent's claim for supplementary uninsured motorists (hereinafter SUM) coverage was therefore denied. Then, on February 22, 1999, petitioner advised respondent that, based on its review of the police accident report and the disclosure that at the time of the accident respondent was driving a 1997 Toyota, which was not a "listed" vehicle under its policy, petitioner's representative "was unable to find coverage for [respondent's] loss".

 

In the meantime, respondent pursued a negligence action against Vervalin. In July 2000, respondent received a settlement offer of $100,000, the full amount of Vervalin's insurance coverage. Respondent then advised petitioner of the settlement offer, gave notice of his intent to pursue a claim under the SUM coverage of petitioner's policy, and sought authorization to settle the action against Vervalin. On October 12, 2000, petitioner gave formal notice of its disclaimer of SUM coverage, setting forth the precise policy provisions forming the basis for its conclusion. Respondent thereafter filed a request for SUM arbitration and petitioner responded by making the present application to stay arbitration. Supreme Court granted the petition, and respondent appeals.

 

The primary issue presented for our consideration is whether petitioner's policy provided no coverage for the July 5, 1998 accident, in which case petitioner was not required to issue a timely disclaimer, or whether the lack of coverage is based on an exclusion, which would require a timely disclaimer. As quite properly contended by respondent, the factual scenario and policy provisions considered by the Court of Appeals in Matter of Worcester Ins. Co. v Bettenhauser (95 NY2d 185) are essentially indistinguishable from those present here, compelling the conclusion that, despite the omission of respondent's Toyota as a "covered auto", the policy issued by petitioner contemplated SUM coverage in the first instance and the denial of SUM coverage to respondent is based on a policy exclusion.

 

The provision of the SUM endorsement insuring agreement [*3]entitled "Damages for Bodily Injury Caused By Uninsured Motor Vehicles" provides:

 

We will pay all sums that the Insured or the Insured's legal representative shall be legally entitled to recover as damages from the owner or operator of an uninsured motor vehicle because of bodily injury sustained by the Insured, caused by an accident arising out of such uninsured motor vehicle's ownership, maintenance or use, subject to the Exclusions, Conditions, Limits and other provisions of this SUM endorsement.

 

It is undisputed that, as the named insured on the policy, respondent was the "Insured", that he sustained "bodily injury" in the accident and that, by virtue of its liability limits, the Vervalin vehicle constitutes "an uninsured motor vehicle", as that term is defined in the SUM endorsement. Notably, as in Matter of Worcester Ins. Co. v Bettenhauser (supra), the foregoing coverage provision imposes no conditions that are dependent on the vehicle driven (see, id., at 190). Rather, the provision denying coverage for bodily injury to an insured occupying a motor vehicle that "is not insured for SUM coverage by the policy under which a claim is made" is contained within exclusion No. 2 of the SUM endorsement. As for petitioner's reliance upon provisions of the policy's business auto coverage form and declarations page, we need merely note that essentially the same argument was unsuccessfully advanced by the Appellate Division majority in Matter of Worcester Ins. Co. v Bettenhauser (260 AD2d 488, 491, revd 95 NY2d 185).

 

Having determined that the lack of coverage forming the basis for petitioner's disclaimer is based on an exclusion, it remains to be determined whether a question of fact exists concerning the timeliness of petitioner's notice of disclaimer. Insurance Law § 3420 (d) requires an insurer to give written notice of a disclaimer of coverage "as soon as is reasonably possible", and failure to do so renders the denial ineffective (see, Hess v Nationwide Mut. Ins. Co., 273 AD2d 689, 690; Mohawk Minden Ins. Co. v Ferry, 251 AD2d 846, 847). As earlier noted, respondent first placed petitioner on notice of the potential for a claim under the SUM endorsement in August 1998 and asserted an actual claim in July 2000. Petitioner provided no notice containing the required "high degree of specificity of the ground [*4]or grounds on which the disclaimer is predicated" (General Acc. Ins. Group v Cirucci, 46 NY2d 862, 864) until it issued its formal disclaimer of coverage in October 2000, more than two years following the initial notice to petitioner and three months following respondent's assertion of an actual claim under the SUM endorsement.

 

The only excuse proffered for this extended delay is the difficulty that petitioner had in reaching respondent or his attorney during a three-month period in late 1998 and early 1999. In any event, there is no question that as of February 18, 1999 — approximately 20 months prior to petitioner's disclaimer — petitioner was aware that the vehicle that respondent occupied at the time of the accident was not listed on petitioner's policy and petitioner therefore had available to it all information necessary to disclaim coverage on the ground that was ultimately employed. Under the circumstances, we conclude that the delay in disclaiming coverage was unreasonable as a matter of law (see, Wasserheit v New York Cent. Mut. Fire Ins. Co., 271 AD2d 439, 440).

 

Crew III, Mugglin, Rose and Lahtinen, JJ., concur.

 

ORDERED that the order is reversed, on the law, with costs, and petition dismissed.

 

AMERICAN BRIDGE CO. v. ACCEPTANCE INS. CO.

 

In an action for a judgment declaring, inter alia, that the defendants are obligated to [*2]defend and indemnify the plaintiffs in an underlying action entitled Prokop v Perini Corp., pending in the Supreme Court, Westchester County, under Index No. 2457/99, the defendant Acceptance Insurance Company appeals (1), as limited by its brief, from so much of an order of the Supreme Court, Westchester County (Nastasi, J.), entered November 15, 2000, as granted that branch of the plaintiffs' motion which was, in effect, for summary judgment declaring that it was obligated to defend the plaintiffs in the underlying action pursuant to a general liability policy it issued, ordered it to pay damages to the plaintiffs, and, in effect, denied its cross motion for summary judgment declaring that it was not obligated to defend and indemnify the plaintiffs in the underlying action, (2) from an order of the same court, entered March 26, 2001, which, inter alia, deemed its third-party action seeking a declaration of coverage against the plaintiffs' insurer a "nullity," (3), as limited by its brief, from stated portions of an interlocutory judgment of the same court, entered March 23, 2001, and (4), as limited by its brief, from stated portions of an amended interlocutory judgment of the same court, entered April 2, 2001, which, inter alia, declared that it is obligated to defend the plaintiffs in the underlying action pursuant to a general liability policy it issued and is in favor of the plaintiffs and against it in the principal sum of $27,372.58, and the plaintiffs cross-appeal from so much of the amended interlocutory judgment entered April 2, 2001, as, in effect, denied that branch of their motion which was for summary judgment declaring that the defendant Acceptance Insurance Company must indemnify them for any judgment entered against them in the underlying action.

 

ORDERED that the appeal from the orders entered November 15, 2000, and March 26, 2001, and the interlocutory judgment entered March 23, 2001, are dismissed, without costs or disbursements, as they were superseded by the amended interlocutory judgment entered April 2, 2001; and it is further,

 

ORDERED that the amended interlocutory judgment entered April 2, 2001, is modified by adding thereto a provision reinstating the third-party complaint of Acceptance Insurance Company against Zurich-American Insurance Group; as so modified, the amended interlocutory judgment is affirmed, without costs or disbursements, the order entered March 26, 2001, is modified accordingly, and the matter is remitted to the Supreme Court, Westchester County, for further proceedings consistent herewith.

 

The Supreme Court correctly determined that Acceptance Insurance Company (hereinafter Acceptance) was obligated to provide the plaintiffs with a defense in the underlying personal injury action, as the allegations in the injured plaintiff's complaint fall within the scope of the risks undertaken by the insurer (see Town of Oyster Bay v Employers Ins. of Wausau, 269 AD2d 387, 388; Tishman Interiors Corp. v Fireman's Fund Ins. Co., 236 AD2d 385, 386-387; Dayton Beach Park No. 1 Corp. v National Union Fire Ins. Co., 175 AD2d 854, 855-856). Since Acceptance breached that duty when it failed to provide a defense to the plaintiffs, it is liable for the defense costs previously incurred by the [*3]plaintiffs in defending the action (see Town of Oyster Bay v Employers Ins. of Wausau, supra).

 

The court also correctly determined that resolution of the issue of indemnification must await findings of fact. Both the plaintiffs in their motion and Acceptance in its cross motion failed to establish entitlement to judgment as a matter of law, thereby precluding summary judgment (see Winegrad v New York Univ. Med. Center, 64 NY2d 851, 853). Their submissions raised issues of fact concerning whether or not the work being performed by the injured plaintiff at the time of the accident was within the "operations" of Acceptance's insured, thereby triggering the additional insured endorsement contained in the policy issued by Acceptance. As noted by the Supreme Court, if it is subsequently determined that the injured plaintiff's accident did not in fact occur within the insured's "operations," then Acceptance would not be obligated to indemnify the plaintiffs (see Town of Oyster Bay v Employers Ins. of Wausau, supra, at 389).

 

However, the Supreme Court erred in deeming Acceptance's third-party complaint against the plaintiffs' insurer a nullity because the main action was finally determined by its order entered November 15, 2000. As discussed above, that order and the subsequent amended judgment entered upon it left the issue of indemnification unresolved. Therefore, the declaratory judgment action was still "pending," and the third-party complaint could properly be commenced (see CPLR 1007). Acceptance's third-party complaint is reinstated, and the matter is remitted to the Supreme Court, Westchester County, for further proceedings.

 

The remaining contentions of Acceptance are without merit.

 

PRUDENTI, P.J., O'BRIEN, FRIEDMANN and McGINITY, JJ., concur.

 

ELITE AMBULETTE CORP. v. ALL CITY INS. CO.

 

In an action for a judgment declaring, inter alia, that the defendant must defend and indemnify the plaintiff in an action entitled Labiak v Elite Ambulance Corp., pending in the Supreme Court, Queens County, under Index No. 14548/98, the plaintiff appeals from an order and judgment (one paper) of [*2]the Supreme Court, Queens County (LeVine, J.), dated June 12, 2001, which, among other things, granted the defendant's motion for summary judgment and declared that the defendant is not obligated to defend and indemnify it.

 

ORDERED that the order and judgment is affirmed, with costs.

 

A vehicle owned by the appellant, Elite Ambulette Corporation (hereinafter Elite), responded to the Astoria home of Frank Labiak to transport him to a medical appointment. Inside Labiak's second-floor apartment, the ambulette driver and attendant, Bruce Hill, helped Labiak from his heavy motorized wheelchair into a lighter manual wheelchair provided by Elite, to transport him into the ambulette. This temporary wheelchair provided by Elite allegedly had no rubber on its wheels, and thus the brake levers that normally wedge against the rubber to prevent the chair from rolling were ineffectual. Hill physically lowered Labiak down a flight of stairs to a first-floor vestibule, which was atop a second, shorter flight of stairs. Hill then left Labiak in the vestibule in the temporary wheelchair, while he went back upstairs to retrieve the motorized wheelchair, which he was also to transport. While Labiak waited in the vestibule, the temporary wheelchair began rolling forward. He tried to apply the brakes, but they were useless. Labiak rolled down four or five steps to a landing, where he fell from the chair and was injured.

 

Labiak commenced the underlying action against Elite and Hill. Elite forwarded copies of the summons and complaint to the defendant, All City Insurance Co. (hereinafter All City), which insured Elite's vehicles for liability "resulting from the ownership, operation, maintenance [or] use" thereof. All City disclaimed coverage on the ground that the accident did not arise from "the ownership, maintenance or use" of a covered ambulette, but due to a fall from an unattended wheelchair that was nowhere near the covered vehicle. Elite thus commenced this action for a judgment declaring, inter alia, All City's duty to provide defense and indemnification in regard to Labiak's claims. The Supreme Court, among other things, granted All City's motion for summary judgment and declared that it was not obligated to defend and indemnify the plaintiff. We affirm.

 

As alleged in his complaint in the underlying action, Labiak's injuries occurred inside his home, as a result of a defective wheelchair and a careless attendant. The covered ambulette parked outside was not in any way involved in the accident. While the terms "use and operation" do include acts of loading and unloading (see Argentina v Emery World Wide Delivery Corp., 93 NY2d 554), the accident herein occurred away from, and incidental to, the covered vehicle. Where coverage is provided for use and operation of a vehicle, to invoke an insurer's duty to defend and/or indemnify, the use of the motor vehicle must be more closely related to the injury (see Wausau Underwriters Ins. Co. v St. Barnabas Hosp., 145 AD2d 314, 315; cf. Argentina v Emery World Wide Delivery Corp., supra). Because the accident was not the result of any act or omission related to the use of the vehicle, the Supreme Court properly declared that [*3]All City was not obligated to defend and indemnify Elite (see Walton v Lumbermens Mut. Cas. Co., 88 NY2d 211; Frontuto v Burgun Trucking Co., 78 NY2d 938; Eagle Ins. Co. v Butts, 269 AD2d 558; Bonner v Stevens, 101 Misc 2d 207; Senia v Government Employees Ins. Co., 85 Misc 2d 762).

 

The remaining contentions of Elite are without merit.

 

S. MILLER, J.P., KRAUSMAN, GOLDSTEIN and COZIER, JJ., concur.

 

UTICA MUTUAL INS. CO. v. TIMMS

 

In an action for a judgment declaring the rights and obligations of the parties with respect to an automobile liability insurance policy, the plaintiff appeals from so much of an order of the Supreme Court, Westchester County (Colabella, J.), entered April 20, 2001, as denied that branch of its cross motion which was for partial summary judgment on its first cause of action seeking a declaration that it was not obligated to provide no-fault benefits to the defendant Calvin Powell on the ground that he submitted a fraudulent claim under the policy. [*2]

 

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

 

The plaintiff commenced this action for a judgment declaring that, based upon the submission of a fraudulent insurance claim by the defendant Calvin Powell (hereinafter the defendant), it was not obligated to provide no-fault coverage or to defend the defendant in an underlying action commenced in the Supreme Court, Bronx County. The defendant notified the plaintiff that he was involved in an automobile accident and that Duane Timms and Craig Keels were passengers in his vehicle. After a hearing, a judicial hearing officer determined, inter alia, that Keels was not a passenger in the defendant's vehicle.

 

The defendant then moved for summary judgment declaring, inter alia, that the plaintiff was obligated to provide him with no-fault benefits. The plaintiff cross-moved for partial summary judgment declaring that it was not obligated to provide those benefits or to defend the defendant in the underlying action. In particular, the plaintiff contended that the defendant's fraudulent conduct relieved it of its obligation to provide him with no-fault benefits or to defend him in the underlying action. The plaintiff further argued that the defendant's alleged breach of the non-cooperation provision of the automobile insurance policy also relieved it from providing no-fault benefits and defending him in the underlying action.

 

The Supreme Court, inter alia, granted the defendant's motion and denied the plaintiff's cross motion to the extent that, notwithstanding the defendant's fraudulent conduct, the no-fault portion of the policy was not vitiated, and, as a result, the plaintiff was required to provide such benefits. The Supreme Court granted the plaintiff's cross motion only to the extent of finding that the plaintiff was not obligated to defend or indemnify the defendant in the underlying action in light of his fraudulent conduct.

 

Contrary to the plaintiff's contention, the defendant's fraudulent conduct did not vitiate the no-fault portion of the policy. "[T]he 'no-fault' endorsement is 'internally complete and a distinct part of the insurance policy. The coverage provided for in the [no fault] endorsement cannot be qualified by the inapplicable conditions and exclusions of the liability portion of the policy'" (Eveready Ins. Co. v Asante, 153 AD2d 874, 877, quoting Matter of Michigan Millers Mut. Ins. Co. v Cullington, 59 AD2d 784, 785). We note, with approval, the Supreme Court's suggestion that the Legislature study and review this loophole in the no-fault law that permits an insured who attempts to commit fraud to reap the benefits of his insurance policy.

 

Accordingly, the Supreme Court properly denied that branch of the plaintiff's cross motion which was for partial summary judgment, and correctly determined that it was obligated to provide no-fault coverage to the defendant.

 
FLORIO, J.P., S. MILLER, SCHMIDT and COZIER, JJ., concur.

 

MATTER OF MERCHANTS MUTUAL INS. CO. v. FALISI

 

In a proceeding pursuant to CPLR article 75 to permanently stay arbitration of a supplementary uninsured motorist claim, the appeal is from a judgment of the Supreme Court, Suffolk County (Underwood, J.), entered October 31, 2001, which granted the petition. [*2]

 

ORDERED that the judgment is affirmed, with costs.

 

The appellant insureds correctly argue that their supplementary uninsured motorist (hereinafter SUM) arbitration claim cannot be stayed because they violated a policy provision requiring prompt notice of the legal action they commenced against the driver of the allegedly offending vehicle. Their insurer, the petitioner Merchants Mutual Insurance Co. (hereinafter Merchants), did not include that ground in its letter of disclaimer. Thus, it waived any right to assert that ground in its petition to stay arbitration as a basis for denying coverage (see General Acc. Ins. Group v Cirucci, 46 NY2d 862; Benjamin Shapiro Realty Co. v Agricultural Ins. Co., 287 AD2d 389; Matter of Fireman's Fund Ins. Co. v Freda, 156 AD2d 364, 365-366).

 

Nevertheless, affirmance of the judgment staying arbitration is warranted. Merchants properly disclaimed coverage due to the appellants' demonstrated failure to provide notice and proof of their SUM claim as soon as practicable, as required by the policy (see Matter of Allstate Ins. Co. v Earl, 284 AD2d 1002; Witterschein v State Farm Ins. Co., 278 AD2d 317; Matter of Nationwide Mut. Ins. Co. v Wexler, 276 AD2d 490; Matter of Eagle Ins. Co. v Bernardine, 266 AD2d 543; State Farm Mut. Auto. Ins. Co. v Romero, 109 AD2d 786).

 

The appellants' remaining contentions are meritless.

 

S. MILLER, J.P., KRAUSMAN, H. MILLER and ADAMS, JJ., concur.

 

CONSOLIDATED EDISON CO. OF NEW YORK, INC. v. ALLSTATE INS. CO.

 

KAYE, CHIEF JUDGE:

 

Central to this appeal by an insured against its insurers are two important law questions: first, whether the insured (or the insurers) should have the burden of proving that the damage was (or was not) the result of an "accident" or "occurrence" within the meaning of the policies, and second, how any liability should be allocated. This case presents something of a time capsule in that nineteenth century technology polluting twentieth century properties will have significant twenty-first century financial ramifications. For approximately 60 years — [*2]from 1873 to 1933 — Consolidated Edison's corporate predecessors owned and operated a manufactured gas plant in Tarrytown, New York. The site was later sold to Anchor Motor Freight, Inc. In 1995, Anchor notified Con Edison that, during an investigation it was conducting pursuant to Department of Environmental Conservation (DEC) requirements, it discovered contamination at the site. Anchor alleged that the manufactured gas plant caused the contamination and demanded that Con Edison participate in the investigation and remediation.

 

After its own investigation, Con Edison entered into an agreement with the DEC to clean up the site, and commenced this declaratory judgment action against 24 insurers that had issued it general liability policies between 1938 and 1986, demanding defense and indemnification for environmental damages arising from the contamination caused by the Tarrytown plant. The policies that were the subject of the complaint were issued in layers, and provided for a self-insured retention in the amount of $100,000 per year from 1938 to 1961, and $500,000 per year from 1961 to 1986. Con Edison's total coverage in excess of the retention ranged between $2 million and $49.5 million during each of the relevant years.

 

Defendant Travelers Indemnity Company, which provided coverage for liability in excess of $20 million from 1964 to 1970, moved for dismissal on the ground that, as to it, the claim was nonjusticiable. Travelers argued that where there is both continuous, progressive property damage and successive insurance, liability should be allocated pro rata among the insurers. Applying a pro rata allocation to damage estimates most favorable to Con Edison, Travelers contended that its excess insurance policies would not be reached in any given policy year. Nineteen other defendants cross-moved to dismiss the complaint against them on the same ground. In response, Con Edison argued against pro rata allocation, asserting that it should be permitted to allocate all liability to any defendant for any one year it elects within the coverage period.

 

Supreme Court dismissed the action as against Travelers and 13 other defendant-insurers who sought dismissal for nonjusticiability, and dismissed the action as against certain policies issued by Century Insurance Company, Home Insurance Company, New England Insurance Company, St. Paul Fire and Marine Insurance Company and Employer's Insurance of Wausau on the same ground. The court ruled that only for the purposes of determining the motion to dismiss, it would prorate the damages and dismiss all policies that would not be reached by that method. The court took the highest projection of damages by Con [*3]Edison's expert ($51 million), divided by the number of years named in the complaint (50), and thus determined that policies that attach at levels above $1.1 million were nonjusticiable because they would not be reached even if Con Edison prevailed at trial. As the court stated:

 

"Here, we have policies from 24 insurers that can be called upon to answer for the claim, all of which are overlapping. The damages cannot be attributed to any specific year or years because there is no documentation nor are there any witnesses that address specific discharges. What is known is that the damages for later years is less than earlier years, because the amount of pollution has diminished over time. Under the circumstances * * * it would be inequitable to put the parties to the expense of trying claims under excess policies issued in later years, when those policies would not be reached if pro rata allocation is applied."

 

The court added, "[t]his necessarily is not the formula I will use at trial since both the plaintiff and defendants should have an opportunity to explore the issue of allocation to the plaintiff based upon a complete record and then the formula can be modified to conform to the proof." Con Edison appealed from that order.

 

In the meantime, all remaining defendants except Home, Lloyd's and St. Paul settled, and the case proceeded to trial as to those defendants. At trial, Con Edison contended that because the coverage language requiring an "accident" or "occurrence" operated to exclude coverage for intended damage, the burden of proving the damage was intended should be assigned to the insurers. The Trial Judge disagreed:

 

"The problem I see with that is the burden of the policy holder to establish that the damage was caused by an accident. It seems to me that the opposite of accidental is intentional, so it seems to me that I think that this is not an exclusion being asserted by the insurance company but a claim being asserted by the policy holder. I think the policy holder has the burden of proof to establish an accident did in fact occur, that is that the damage was not an intentional act. I will so charge the jury.

 

The jury found that there was property damage at the site during the years that the three defendants' policies were in effect, but that the property damage was not the result of an "accident" or "occurrence," and thus there was no coverage. Con Edison appealed, arguing that the court erred in assigning it the burden of establishing that the property damage was the result of an "accident" or "occurrence."

 

Both as to allocation and as to burden of proof, the Appellate Division affirmed. In light of the jury verdict in favor of the insurers, the Appellate Division held that the appeal from the pretrial order dismissing claims against several of the insurers was moot as to all of the policies similar in language to those that went to trial, and to the extent the language of some of the policies was different the Trial Court properly prorated the damages over the 50-year period. We now affirm.

 

Burden of Proof

 

Generally, it is for the insured to establish coverage and for the insurer to prove that an exclusion in the policy applies to defeat coverage (see Northville Indus. Corp. v National Union Fire Ins. Co., 89 NY2d 621, 634 [1997]; Technicon Elec. Corp. v American Home Assur. Co. et al., 74 NY2d 66, 73-74 [1989]). Is the issue before us, then, a matter of coverage (placing the burden on Con Edison to establish an accident or occurrence) or a matter of exclusion (placing the burden on the insurers to establish that the resulting property damage was intended)? The answer to that question centers on the language of the policies.

 

The Lloyd's, St. Paul and Home policies that were the subject of the trial contained substantially similar language. The Lloyd's policies, in effect from 1936 to 1944, open with an undertaking to pay Con Edison's liability "for damage to or destruction of property of others * * * caused by accident occurring during the period * * *." "Accident" is defined as "an accident or series of accidents arising out of one event or occurrence." The St. Paul policies, in effect from 1944 to 1961, also provide in the opening paragraph for indemnification for liability "by reason of damage to or destruction of property arising from or growing out of any accident occurring during the period * * *." "Accident" is defined as "each and every accident or event or series of accidents or events arising from the same occurrence." The Home policies, in effect from 1961 to 1970, under the heading "Coverage," provide indemnification for liability "for damages * * * on account of * * * property damage, [*4]caused by or arising out of each occurrence." "Occurrence" is defined as "an event, or continuous or repeated exposure to conditions, which causes injury, damage or destruction during the policy period."

 

Thus, each of the policies speaks of damages caused by or arising from either an "accident" or an "occurrence." None of the policies contains an exclusion for intended or expected harm. Con Edison argues that compelling it to prove that property damage is a result of an accident or occurrence forces it to prove a negative — that it did not intend to cause the property damage. Relying on several Appellate Division decisions, as well as a Second Circuit decision applying New York law, Con Edison urges that the effect of the language, not its placement in the policy, should determine assignment of the burden of proof. Thus, Con Edison continues, because the terms "accident" and "occurrence" in the coverage language have the effect of excluding coverage for intended and expected harms, once it proved property damage during the policy period the insurers should have had the burden of proving that the property damage was intended or expected.

 

The insurers counter that there is no coverage under the policies unless there is an "accident" or "occurrence," that they are not seeking to invoke any exclusion and thus that the Trial Court correctly assigned Con Edison the burden of proof.

 

In policies that actually define "accident" or "occurrence" as "unintended or unexpected," courts have divided on whether the insured bears the burden of proving that the damage was unintended, or whether the insurer has the burden of proving that the damage was intended and is thus excluded (compare Vermont v CNA Ins. Co., 779 A2d 662, 671 [Vt 2001] and Carter-Wallace Inc. v Admiral Ins. Co., 154 NJ 312, 330 [1998][burden on insurer] to Queen City Farms, Inc. v Cent. Natl. Ins. Co. of Omaha, 126 Wash2d 50, 71 [1994] and Aetna Cas. and Sur. Co. v Dow Chem. Co., 28 FSupp2d 421, 426 [ED Mich 1998][burden on insured]).

 

Although the policies at issue do not explicitly define "accident" or "occurrence" as unintended or unexpected, Con Edison argues that because the practical effect of those coverage terms is to create an exclusion for intended harm, the burden of proof should be on the insurers. Indeed, the United States Court of Appeals for the Second Circuit reached that conclusion in Stonewall Insurance Co. v Asbestos Claims Management Corp. (73 F3d 1178 [2d Cir 1995]). Applying what it perceived to be New York law, the court concluded that the policy's definition of the term "occurrence" as an unintended event operated as an [*5]exclusion, and thus the insurer had the burden of proving that the damages were caused intentionally. The court reached that result based on the principle that the effect of policy language, not its placement, controls allocation of the burden of proof (Stonewall Ins. Co., 73 F3d at 1205 [citing Utica Mut. Ins. Co. v Prudential Prop. & Cas. Ins. Co., 103 AD2d 60, 64 (1984)]).

 

In our view, the contention that the requirement of an "accident" or "occurrence" itself operates as an exclusion is unpersuasive. Any language providing coverage for certain events of necessity implicitly excludes other events. Indeed, virtually all of the language in the policies following the initial grant of coverage has the effect of limiting the scope of coverage in one way or another (see Abraham, Environmental Liability Insurance Law 140-141 [1991]).

 

Insurance policies generally require "fortuity" and thus implicitly exclude coverage for intended or expected harms. Insurance Law § 1101(a) itself defines "insurance contract" as:

 

"any agreement * * * whereby one party, the 'insurer', is obligated to confer benefit of pecuniary value upon another party, the 'insured', * * * dependent upon the happening of a fortuitous event * * *."

 

A "fortuitous event" is defined as:

 

"[A]ny occurrence or failure to occur which is, or is assumed by the parties to be, to a substantial extent beyond the control of either party."

 

Thus, the requirement of a fortuitous loss is a necessary element of insurance policies based on either an "accident" or "occurrence." The insured has the initial burden of proving that the damage was the result of an "accident" or "occurrence" to establish coverage where it would not otherwise exist (see Northville Indus., 89 NY2d at 634). Once coverage is established, the insurer bears the burden of proving that an exclusion applies.

 

Especially in the environmental pollution context, such a result "provides the insured with an incentive to strive for early detection that it is releasing pollutants into the environment" (Northville Indus., 89 NY2d at 634). In addition, it "appropriately places the burden of proof on the party having the better and earlier access to the actual facts and [*6]circumstances surrounding the discharge," including information about its own intentions and expectations (id.).

 

Thus we conclude that the Trial Court and Appellate Division correctly placed the burden of proof on Con Edison.

 

The Jury Questions

 

Con Edison alternatively contends that the verdict sheet improperly focused the jury on whether the acts causing the property damage were intentional, rather than on whether the resulting property damage was intended. The questions at issue are Jury Questions 3 and 5, which asked, "Was the property damage the result of an accident?" and Jury Question 7, which asked, "Was the property damage the result of an occurrence?" Although Con Edison does not contest that the jury charge as a whole was correct, it urges that the jury questions were a fundamental misstatement of the issue and necessitate a new trial.

 

The Trial Judge instructed the jury that there "can be accidental results of intentional acts, thus, the term 'accident' or, in this case, 'occurrence' might apply even where the resulting damage was unintended, even though the acts that caused the damage were, in fact, intentional." After less than an hour of deliberation, the jury sent out a note asking for "the legal definition of property damage and accident/occurrence." The Court then reread the charge, and the jury resumed its deliberations.

 

The jury questions are a clear and simple statement of the issue, importing the language of the policies, and in our view were not erroneous. Further, because the relevant instruction on the issue, given twice, was an indisputedly accurate statement of the law, we conclude that any conceivable lack of clarity in the jury questions was harmless (see People v Piazza, 48 NY2d 151, 165 [1979]).

 

Allocation

 

We next consider whether the Trial Court properly prorated the estimated prospective damages for purposes of the motion to dismiss.

 

Travelers argues that, in light of the jury verdict that the property damage was not the result of an accident or occurrence, appeal of the pretrial ruling dismissing many of the insurers is moot. Con Edison counters that, under the different policy language of four of the dismissed insurers — which we do not consider — the insurers, rather than Con Edison, would have had the burden of proving at trial that the damage was intended. In light of the jury verdict, the appeal from the pretrial nonjusticiability ruling is moot as to all of the policies that contained the same language as the policies that went to trial. [*7]However, as the Appellate Division correctly noted, to the extent that some of the policies contained different policy language which arguably might have placed the burden of proof at trial on the insurers to establish that Con Edison intentionally caused property damage, the appeal is not moot.

 

Where, as here, an alleged continuous harm spans many years and thus implicates several successive insurance policies, courts have split as to whether each policy is liable for the entire loss, or whether each policy is responsible only for a portion of the loss. This is a matter of first impression for this Court, though Federal courts have predicted New York's answer (see e.g. Sybron Transition Corp. v Security Ins. of Hartford, 258 F3d 595 [7th Cir 2001]; Olin Corp. v Insurance Co. of N. Am., 221 F3d 307 [2d Cir 2000]).

 

In determining a dispute over insurance coverage, we first look to the language of the policy (see Breed v Insurance Co. of N. Am., 46 NY2d 351, 354 [1978]). We construe the policy in a way that "affords a fair meaning to all of the language employed by the parties in the contract and leaves no provision without force or effect" (Hooper Assocs., Ltd. v AGS Computers, Inc., 74 NY2d 487, 493 [1989]).

 

Here, the dispute centers on two policy terms: "all sums" and "during the policy period." In the words of a representative Travelers policy:

 

"1. Coverage

 

"To indemnify the insured for all sums which the insured shall be obligated to pay       by reason of the liability

 

(a)    imposed upon the insured by law, or

(b)   assumed by the insured * * *,

 

for damages, direct or consequential, and expenses, all as more fully defined by the term ultimate net loss, on account of * * * property damage, caused by or arising out of each occurrence.

 

* * *

"3. Policy Period:

 

"This policy applies only to 'occurrences' as defined herein, happening during the policy period.

 

* * *

 

"Definitions

 

* * *

 

"4. Occurrence

 

"The term 'Occurrence' wherever used herein, shall mean an event, or continuous or repeated exposure to conditions, which causes injury, damage or destruction during the policy period. All such exposure to or events resulting from substantially the same general conditions during the policy period shall be deemed one occurrence" [emphasis supplied].

 

Con Edison urges that it should be permitted to collect its total liability — "all sums" — under any policy in effect during the 50 years that the property damage occurred, up to that policy's limit (see, e.g., Koppers Co. v Aetna Cas. & Sur. Co., 98 F3d 1440 [3d Cir 1996]; Keene Corp. v Insurance Co. of N. Am., 667 F2d 1034 [DC Cir 1981]). In a subsequent action, the indemnifying insurer could then seek contribution from the other insurers who also provided coverage during the relevant period. This is referred to as "joint and several allocation," by analogy to joint and several tort liability.

 

The insurers, by contrast, argue that a straightforward reading of the phrase "during the policy period" limits an insurer's liability to "all sums" incurred by the insured "during the policy period." Under this reading, referred to as "pro-rata allocation," the liability is spread among the policies (see, e.g., Olin Corp., 221 F3d at 307; Insurance Co. of N. Am. v Forty-Eight Insulations, Inc., 633 F2d 1212 [6th Cir 1980]).

 

While Con Edison points to precedents of this Court in support of its position, the cases do not in fact support joint and several allocation. In York-Buffalo Motor Express, Inc. v National Fire & Marine Ins. Co. (294 NY 467 [1945]), where two insurers provided concurrent coverage for a car accident, we allowed the insured to recover the whole amount from either insurer. The present case, however, involves multiple successive insurers and a continuous harm. In Continental Cas. Co. v Rapid-American Corp. (80 NY2d 640 [1993]), we addressed whether defense costs should be allocated among several policy periods, as well as periods of self-insurance. After noting that the duty to defend is broader than the duty to indemnify, we held that "pro rata sharing of defense costs may be ordered, but we perceive no error or unfairness in declining to order such sharing, with the understanding that the insurer may later obtain contribution from other applicable policies" (id. at 654). We left open the issue whether indemnification should be prorated among the applicable policies.

 

Con Ed maintains that pro rata allocation among the insurers would only be appropriate if the policies contained "other insurance" clauses providing for such allocation. This argument mistakes the function of "other insurance" clauses. Such clauses apply when two or more policies provide coverage during the same period, and they serve to prevent multiple recoveries from such policies (see Owens-Illinois v United Ins. Co., 138 NJ 437, 470 [1994]; 6 Appleman, Insurance Law and Practice § 3905). Here, by contrast, the issue was whether any coverage potentially existed at all among certain high-level policies that were in force during successive years. "Other insurance" clauses have nothing to do with this determination.

 

Con Edison also suggests that the recent trend in other courts has been toward adopting the joint-and-several method. The authorities cited by Con Edison are, however, largely distinguishable, either because of different policy language or because of different choices by the insured regarding whether to self-insure (cf. e.g. Hercules Inc. v AIU Ins. Co., 784 A2d 481, 493-494 [Del 2001]).

 

Joint and several allocation in the present factual setting is inconsistent with the unambiguous language of the policies before us. Con Edison concedes that it is impossible to determine the extent of the property damage that is the result of an occurrence in a particular policy period. Indeed, its theory of the case was that while the plant was in operation — long before any of the policies were issued — there were leaks, spills and drips that eventually migrated to the groundwater. Con Edison planned to establish that the dispersion of the pollutants was a gradual, continuous process, thus creating an inference that there was an accident or occurrence during each and every policy period, though there is no evidence of an accident during any particular policy period.

 

Con Edison wants to combine this uncertainty-based approach, which implicates many successive policies, with an entitlement to choose a particular policy for indemnity. Yet collecting all the indemnity from a particular policy pre-supposes ability to pin an accident to a particular policy period (see Sybron Transition Corp., 258 F3d at 601; Owens-Illinois, 138 NJ at 465). Although more than one policy may be implicated by a gradual harm (see e.g. McGroarty v Great Am. Ins. Co., 36 NY2d 358, 365),[FN1] joint and several allocation is not consistent with the language of the policies providing indemnification for "all [*10]sums" of liability that resulted from an accident or occurrence "during the policy period" (see Olin Corp., 221 F3d 307, 323).

 

Pro rata allocation under these facts, while not explicitly mandated by the policies, is consistent with the language of the policies. Most fundamentally, the policies provide indemnification for liability incurred as a result of an accident or occurrence during the policy period, not outside that period (see Forty-Eight Insulations, Inc., 633 F2d at 1224). Con Edison's singular focus on "all sums" would read this important qualification out of the policies. Proration of liability among the insurers acknowledges the fact that there is uncertainty as to what actually transpired during any particular policy period (see Sybron Transition Corp., 258 F3d at 602).

 

We recognize — as did the Trial Court — that there are different ways to prorate liability among successive policies. Here, the court prorated liability based on the amount of time the policy was in effect in comparison to the overall duration of the damage. In Owens-Illinois, the New Jersey Supreme Court contemplated proration by multiplying the number of years the insurer provided coverage by the limits of the policies, and held that each insurer would be liable for that portion of the liability corresponding to the ratio of the total coverage provided by that insurer to the total coverage provided by all the policies in effect (138 NJ at 479). Other courts have prorated coverage based on the proportion of injuries suffered during relevant policy periods (see Uniroyal, Inc. v Home Ins. Co., 707 FSupp 1368 [ED NY 1988]). Courts also differ on how to treat self-insured retentions, periods of no insurance, periods where no insurance is available and settled policies under various allocation methods.

 

Here, in determining whether certain upper-layer policies were justiciable, the Trial Court was presented with the "time-on-the-risk" method as an alternative to Con Edison's "joint-and-several" approach. The court applied "time on the risk" and thus dismissed claims against policies that would not be reached under Con Edison's highest estimate of damages. That was not error. We note, however, that this conclusion does not foreclose pro rata allocation among insurers by other methods either in determining justiciability or at the damages stage of a trial. Clearly this is not the last word on proration.

 

Finally, Con Edison asserts that the Trial Court's proration of damages deprived it of the benefits of valuable premium payments over many years. However, the proration ruling dismissed only certain high-level insurers — Con Edison did get to try its claims to a jury, albeit unsuccessfully, against three [*11]of the insurers who provided coverage for 39 years. And even applying pro rata allocation, had Con Edison succeeded in persuading the jury of the merits of its position, it might well have been entitled to recover under policies issued from 1936 to 1961, when the self-insured retention was $100,000. In the end, the result is dictated not by the pro rata allocation, but by Con Edison's inability to convince the jury that the property damage was the result of an "accident" or "occurrence" as required by its insurance policies.

 

Accordingly, the order of the Appellate Division should be affirmed, with costs.

 

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

 

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

 

Decided May 2, 2002

 

Footnotes

 

Footnote 1:The issue of how coverage is "triggered" is not before us.

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