Coverage Pointers - Volume IV, No. 22

New Page 1

 

06/03/03            CENTEREACH REALTY, LLC v ESSEX INS. CO.

New York State Supreme Court, Appellate Division, First Department

Employer Liability Exclusion Bars Coverage for Claim by Named Insured’s Employee Against Additional Insured

Court held that policy, which states it does not provide coverage for injuries to employees of the named insured, did not afford coverage in an underlying action against additional insured brought by an employee of the named insured to recover for personal injuries allegedly sustained in the course of his employment.

 

06/02/03            MATTER OF PHOENIX INS. CO. v TASCH

New York State Supreme Court, Appellate Division, Second Department

UM Coverage Lost for Insured’s Failure to Provide Timely Written Notice of Claim

Court held that respondent failed to establish that he provided timely written notice of an underinsured motorist (UM) claim, and, as such, an application to permanently stay arbitration of the claim was properly granted. The policy required that the insured give written notice of an UM claim “as soon as practicable,” which is measured from the date he knew or should have known that the tortfeasor was underinsured. The insurer specifically denied receipt of any letter of notice of intent to file an underinsured claim, purportedly mailed to the insurer by the insured’s attorney. While a party is entitled to a rebuttable presumption of receipt based on proof of regular mailing, the insurer failed to submit sufficient evidence attesting to the mailing of the letter, or to the existence of an office practice geared to ensure the proper addressing or mailing of the letter.

 

06/02/03            MATTER OF GOVERNMENT EMPLOYEES INS. CO. v MORENO

New York State Supreme Court, Appellate Division, Second Department

Carrier’s Failure to Issue Disclaimer to Permissive User Results in Coverage

Petition to permanently stay arbitration of a UM claim was properly granted where it was shown that carrier failed to properly disclaim coverage. It was not disputed that the carrier issued a policy covering the offending vehicle, and, while that carrier properly disclaimed coverage as to the owner of that vehicle, it failed to do so as to the driver of the offending vehicle, for whom coverage was afforded as a permissive user of the vehicle. Thus, coverage existed for the vehicle.

 

05/28/03            ZURICH AMERICAN INS. CO. v ABM INDUSTRIES, INC.

United States District Court, Southern District of New York

Insured Not Entitled to Recover Business Interruption Loss Claimed by Destruction of WTC Premises it Served but did not Occupy

ABM was responsible for providing janitorial, lighting, and engineering services to public common areas of the World Trade Center complex, as well as janitorial services to tenants. ABM occupied office and storage space, had access to janitorial closets and sinks on every floor, and enjoyed exclusive after-hours use of freight elevators. ABM purchased insurance from Zurich, which provided coverage for loss or damage to ABM’s “real and personal property,” including “property owned, controlled, used, leased or intended for use” by ABM; “loss resulting directly from the necessary interruption of [ABM’s] business caused by direct physical loss or damage ... to insured property at an insured location”; “extra expense insured” by ABM as a result of “loss, damage, or destruction ... to [ABM’s] real or personal property”; and losses related in various specified ways to “off premises utility and power stations,”, “properties not operated by [ABM],”, “Impounded Water”, “Leader Property”, “Interruption by Civil or Military Authority”, and “Ingress/Egress”. Court held that ABM could not recover for any business interruption loss claimed as a result of the destruction of the WTC premises it served but did not occupy (the tenant's premises and public common areas); only such losses caused by the destruction of space that ABM occupied or caused by the destruction of ABM’s supplies and equipment located in the WTC were covered by the policy. The court rejected ABM's contention that it “used” common areas within the policy’s definition of “insured property,” since ABM did not accomplish any purpose by means of the common areas, which served only as the locations of ABM’s acts. Moreover, ABM did not have “control” over common areas sufficient to give it a legally cognizable interest in the property. Next, the court held that ABM could not recover for increased employee costs incurred through agreement requiring it to offer senior employees displaced by the WTC’s destruction with the jobs of junior employees working elsewhere; increased state unemployment obligations incurred as a result of terminations; wages and expenses paid by ABM to former employees; and, claims preparation fees. These expenses resulted from the destruction of the tenanted premises and common areas ABM serviced in the WTC, not from the destruction of ABM’s equipment, supplies, or office or storage space. Finally, ABM could not recover for its claims relating to off- premises utilities, impounded water, leader property, interruption by civil or military authority and ingress/egress because such losses resulted from the fact that the premises of ABM’s customers in the WTC were no longer available to be served.

Prepared with assistance from Daina Kojelis of Zurich Insurance

 

05/27/03          IN THE MATTER OF LUMBERMENS MUTUAL CASUALTY COMPANY v QUINTERO

New York State Supreme Court, Appellate Division, Second Department

Uninsured Motorists Carrier Who Raised Unrebutted Prima Facie Proof that Offending Vehicle Was Insured Had No Obligation to Itself Deny Coverage

In a proceeding to stay arbitration of a claim for uninsured motorist benefits, the claimants’ insurer has the initial burden of proving that the offending vehicle was insured at the time of the accident, and thereafter the burden is on the party opposing the stay to rebut that prima facie showing. In this case, at the hearing, the appellants’ insurer made a prima facie showing that the offending tractor was insured on the date of the subject accident. In response to such showing, neither the appellants nor the additional respondents offered any probative evidence to rebut that prima facie case. Thus, the Supreme Court properly granted a stay of arbitration of the claim for uninsured motorist benefits on the ground that the offending tractor was insured on the day of the accident. The Court rejected the appellants’ contention that their insurer should be estopped from denying coverage of their uninsured motorist claims for failure to timely disclaim. An insurer has no obligation to timely disclaim in those situations in which coverage does not exist. Therefore, the appellants’ insurer was not required to timely disclaim, as the uninsured motorist coverage of the policy would not attach unless and until it was established that the offending vehicle was uninsured on the date of the accident.

 

05/27/03            ST. PAUL FIRE AND MARINE INS. CO. v 111 TENANTS CORP.

United States District Court, Southern District of New York

Deterioration Exclusion Bars Coverage for Costs of Replacing Gas Distribution System

Insurer sought a declaration that it was not obligated to cover costs incurred by the insured in replacing the gas distribution system of its cooperative apartment building. The superintendent reported smelling gas in the basement of the building to Con Ed, who then tested the entire gas piping system, as required by New York City administrative code. When the tests were conducted, a number of gas risers leading from the basement failed. As a result, the insured undertook to replace the entire gas distribution system, and submitted a claim to its insurer for the costs. The insurer disclaimed on two grounds - a deterioration exclusion and a “testing” exclusion. The court held that the “testing” exclusion did not apply - the exclusion does not apply to loss caused by or resulting from testing, but loss caused by or resulting from defects or errors in the testing of covered property, and there was no claim here of any defect or error in the testing performed on the gas distribution system. The court found the loss was excluded under the deterioration exclusion, however, because two uncontradicted expert reports concluded, through process of elimination, that the underlying cause of all the leaks was ordinary deterioration rather than some external event.

 

ACROSS BORDERS

 

06/04/03            EMPLOYERS INS. OF WAUSAU v GRANITE STATE INS. CO.,

Ninth Circuit (considering California law)

Statute of Limitations in Subrogation Action Between Primary and Excess Insurer Analyzed

A subrogation action between a primary insurer and an excess insurer was not time-barred, as the statute of limitations in such an action is that which would have been applicable had the insured brought suit on its own behalf. California courts have not broadly rejected “stacking” policy limits in the primary insurer context.

 

06/03/03            HOLLIS v DOERFLINGER

Tennessee Court of Appeals

Policy Interpretation Does Not Cover Viable Fetus

This case arose when the plaintiff’s pregnant wife was involved in an accident and was killed. The wife was at fault for the accident. The plaintiff sought damages from his wife’s estate for the wrongful death of the fetus. The plaintiff sought a declaratory judgment that the claims against the wife’s estate were covered under the automobile policy. Based on language of the automobile policy, coverage was excluded for certain damages the Hollis’ became legally responsible for. The language of the policy excluded coverage for “bodily injury to anyone related to that insured by blood, marriage or adoption who is a resident of the same household.” The insurance company contended that the fetus was a resident of the wife’s household and therefore coverage was excluded. The father argued that the fetus did not constitute a resident because only the plaintiff and his wife had been listed on the policy as residents of the household. The trial court granted partial summary judgment in favor of the plaintiff with respect to the insurance coverage issue. The Tennessee Court of Appeals reversed partial summary judgment. The court held that the exclusion was applicable and the insurance company was not required to provide coverage on the bodily injury to the fetus. Relying on earlier cases, the court explained that a viable fetus resides wherever its mother resides.

Prepared by Daniel Mawhinney and Kim Murphy of Thompson & Bowie, LLP in Portland, Maine

 

06/03/03            ATS, INC. v  LISTENBERGER

Missouri Court of Appeals

No Subrogation Rights to Attorney Malpractice Settlement Proceeds for Employer or Insurer under Workers Comp Act

Employee was injured as a result of an auto accident during the scope and course of employment and received workers’ compensation benefits. Employee retained counsel to sue the tortfeasor, but counsel failed to timely fail a claim. Employee sued counsel for malpractice and this suit settled. Employer and Comp. Insurer claimed they had subrogation rights to the settlement proceeds. Summary judgment for Employee affirmed; this is not the type of injury for which subrogation rights lie under the workers’ comp act.

Prepared by Daniel Mawhinney and James A. Billings of Thompson & Bowie, LLP in Portland, Maine

 

06/02/03          METROPOLITAN GROUP PROPERTY AND CASUALTY INS. CO. v LOPES, ET AL.

Rhode Island Supreme Court

Notice of Cancellation is Effective to Terminate Coverage Even if Such Notice Refers to an Amount Due

Metropolitan had issued an automobile insurance policy to Lopes’ wife. Upon non-payment, Metropolitan issued a notice of cancellation that provided the insurance coverage would lapse by a certain date unless payment was sent. The wife did not pay by the date and the coverage was cancelled, but was later paid and reinstated. An accident involving the defendant’s grandson had occurred between the time of cancellation and the time of reinstatement. Metropolitan withdrew the counsel that had originally been appointed for the defendants, claiming that there was no coverage under the policy. The trial court granted summary judgment in favor of Metropolitan holding that the notice of cancellation was clear and the insurance policy was terminated. The Rhode Island Supreme Court affirmed the summary judgment. The notice of cancellation was found to clearly describe the time and manner the policy would lapse and the court rejected the argument that reference to an amount due nullifies the notice as a cancellation method.

Prepared by Daniel Mawhinney and Kim Murphy of Thompson & Bowie, LLP in Portland, Maine

 

05/30/03            REDNOUR v HASTINGS MUTUAL INS. CO.,

Michigan Supreme Court

All The Air Was Let Out of Plaintiff’s Case

Plaintiff was driving a friend’s car in Ohio. When the left rear tire of the vehicle became flat, he prepared to change the tire, by leaving the car and loosening the lug nuts. As plaintiff began to walk toward the rear of the car, an oncoming automobile struck plaintiff and threw him against the car he had been driving, injuring him. Plaintiff admitted that he had not been touching the car, and that he had been approximately six inches from it when the other vehicle struck him. Hastings denied coverage on the basis that plaintiff was not “occupying” the car. The policy defined “occupying” as “in, upon, getting in, on, out or off.” The trial court granted Hastings’ motion and dismissed the claim. The court of appeals reversed; it ruled that “occupying” was ambiguous and construed the term against Hastings. The supreme court reversed, reinstating the trial court’s ruling.

Prepared by Daniel Mawhinney and James A. Billings of Thompson & Bowie, LLP in Portland, Maine

 

05/30/03            MISHOE v ERIE INS. AND HAMER v FEDERAL KEMPER

Pennsylvania Supreme Court

No Right to a Jury Trial in a Bad Faith Action Under Pennsylvania Law

In a consolidated action, the Pennsylvania Supreme Court evaluated whether 42 Pa.C.S. § 8371 included a right to a jury trial. In both cases, the plaintiffs had initiated suits against their insurance carriers claiming that the companies had acted in bad faith. Both plaintiffs had received a judgment under arbitration that significantly exceeded prior offers from the insurance companies. In both instances, suits were filed and requests for a jury trial were denied. Section 8371 provided the actions a court could take if an insurer was found to have acted in bad faith. These actions included interest on the judgment, punitive damages and assessment of court and attorneys fees. Plaintiffs asserted that the right to a jury could be found in § 8371 or in the alternative in the state’s Constitution. The court rejected the plaintiff’s statutory interpretation as well as the argument that the right to a jury was found in the Pennsylvania Constitution. The orders of the court denying jury trials were affirmed.

Prepared by Daniel Mawhinney and Kim Murphy of Thompson & Bowie, LLP in Portland, Maine

 

05/30/03          ATCHISON, TOPEKA & SANTA FE RY. CO. v STONEWALL INS. CO.

Supreme Court of Kansas

“Occurrence” was failure to protect employees, self-insured retentions are considered other insurance under excess insurer policies and, thus, insured must exhaust is retentions per annual policy period, the insurers were not jointly and severally liable,

Railroad sought declaratory judgment that its excess insurance policies provided coverage for 3,800 employees who have suffered from noise induced hearing loss (NIHL). The court held the occurrence under the policies was the railroad’s failure to protect its employees from the noise, not the occurrence of the noise itself. Coverage under the policies was continuously triggered during the years in question. However, the self-insured retentions (SIRs) are other insurance under the policies, and thus primary insurance. Primary coverage attaches upon the happening of an occurrence, which was the failure of Santa Fe to provide protection for its employees. An excess policy covers the loss over and above that provided by the primary insurance. The insured must exhaust its SIRs per annual policy period. The concept of joint and several liability is not consistent with the term “all sums” in the policies. It also clearly contradicts the fundamental insurance agreement to indemnify the insured for injuries during a specified policy period. The court could not determine with certainty if the SIRs were sufficient to cover the damages for each year in question. Thus, this case was remanded for the trial court to make that determination, and if the SIRs were not sufficient, to allocate the damages attributable to the excess coverage for that annual policy period. Insurers set out facts they contend require the conclusion that Santa Fe’s losses were not fortuitous, but the court held that losses were not expected. Next the court held that, because the Insurers did not exclude coverage, they were not in a position to claim that coverage was precluded by the known loss doctrine. Finally, because the Insurers admitted that they would not have acted differently had they received timely notice of the claims, the timing of Santa Fe’s notice to the Insurers was not a bar to coverage.

Prepared by Bruce D. Celebrezze and Hank Brier of Celebrezze & Wesley in San Francisco

 

05/29/03            STANDARD INS. CO. v VASQUEZ AMERICAN

Wisconsin Court of Appeals

Notice of Cancellation Does Not Apply To Party Not Named As Insureds In Policy

Vasquez appealed summary judgment in favor of Allstate, contending that Allstate had removed him from the policy without proper notice. The Wisconsin Court of Appeals found that Allstate was not required to given Vasquez notice and the summary judgment was affirmed. Vasquez was an insured person under the policy only by virtue of his relationship with the named insured, his fiancé. The policy in question extended coverage to resident spouses, however, Allstate had made it a practice to treat cohabitants who shared a child together as spouses. Once the relationship between Vasquez and the named insured ended, the named insured contacted Allstate and had his name removed from the policy. Following his removal from the policy, Vasquez was involved in an accident. Vasquez claimed that Allstate was obligated to notify him of this cancellation within ten days according to the terms of the policy. The court determined that as Vasquez was not the policyholder of record, when he moved out his relationship, coverage under the policy was terminated. The court also noted that no notice was required because it was the named insured who cancelled the policy, not Allstate.

Prepared by Daniel Mawhinney and Kim Murphy of Thompson & Bowie, LLP in Portland, Maine

 

05/29/03            RANGER INS. CO. v WARD

Court of Appeals Sixth Appellate District of Texas at Texarkana

Attempted retroactive release of a liability insurance policy, after a known claim had arisen, is void based on public policy

As required by Texas law, the insured purchased liability insurance to cover his commercial herbicide and pesticide application business. Following the commencement of a suit by landowners whose land was damaged by the insured’s spraying of pesticides, the insured and the insurer entered into a retroactive release of the insurance policy. The court held that a release is subject to the public policy of the state, and that the parties attempt to circumvent the intent of the required insurance clearly violated public policy. Such an attempt to avoid legally imposed duties and to undermine the intent of the laws of the State violated public policy in the most egregious manner. Accordingly, the grant of summary judgment to the injured third-party landowners was affirmed.

Prepared by Bruce D. Celebrezze and Hank Brier of Celebrezze & Wesley in San Francisco

 

05/28/03          GOLF CARS OF ARKANSAS, INC. v UNION STANDARD INS. CO.

Arkansas Court of Appeals

General Commercial Liability Policy may cover loss of use as a result of insured’s providing its client with defective goods

Supplier of golf course maintenance vehicles was sued by client due to defects in the equipment. Insurer sought declaratory judgment that it had not duty to defend or indemnify the insured under a commercial general liability policy that it had issued, on the ground that there was no “occurrence” that triggered coverage and there was no “property damage.” The court held that there was a question of fact as to whether the acts or omissions by the insured caused the third-party’s damages. The court also recognized that an insured may recover damages for loss of use when the property has not been physically injured. Accordingly, the trial court’s grant of summary judgment was inappropriate, and the case was remanded for trial.

Prepared by Bruce D. Celebrezze and Hank Brier of Celebrezze & Wesley in San Francisco

 

05/29/03          S.C. FARM BUREAU MUT. INS. CO. v S.E.C.U.R.E. UNDERWRITERS

South Carolina Court of Appeals

Coverage For Injuries Caused By Family Dog At Business Location Not Excluded Under Business Pursuits Exclusion

A four-year-old girl was bitten by the insureds’ family dog while lawfully on the business premises of the insureds’ pest control business. Farm Bureau issued Ralph and Mary Garrison a homeowner’s insurance policy which excluded coverage for bodily injury or property damage arising out of business pursuits of an insured or arising out of a premises owned by the insured that is not an insured location. Coverage for injuries caused by the dog bite was not excluded under the business pursuits exclusion because the liability arose from the insureds’ personal tortious conduct in harboring a vicious animal and not from any condition of the premises upon which the animal was located.

Prepared by Bruce D. Celebrezze and Joseph Pelochino of Celebrezze & Wesley in San Francisco

 

05/27/03            TARICANI v NATIONWIDE MUTUAL INS. CO.

Connecticut Appellate Court

Insurer Must Be Prejudiced To Escape Liability For Breach of Cooperation Clause

The insureds made a claim on their business insurance policy after a fire destroyed their property. The insurer denied coverage on the grounds that the insureds had violated the cooperation clause in the policy by failing to appear for an examination under oath for a significant period of time after the occurrence of the fire. The policy required the plaintiffs to cooperate in the investigation of a claim and authorized the defendant to examine any insured under oath. After finding the insureds’ blanket invocation of the Fifth Amendment to be a material breach of the policy, the Appellate Court held, as a matter of first impression, that the requirement of prejudice resulting from a failure to give timely notice also extends to a failure to cooperate. Thus, because the insureds here failed to satisfy their burden of showing no prejudice to the insurer from their lack of cooperation, the court affirmed summary judgment for the defendant insurer.

Prepared by Bruce D. Celebrezze and Joseph Pelochino of Celebrezze & Wesley in San Francisco

 

AND IN DEFENSE

 

06/05/03          GERMANTOWN CENT. SCHOOL DIST. v CLARK, CLARK, MILLIS & GILSON

New York Court of Appeals

Property Damage Claim Brought as a Result of Asbestos Insulation One for Latent Damage, So “Discovery Statute of Limitations” Inapplicable

A school district commenced this professional malpractice action upon discovering asbestos in one of its buildings more than a decade after completion and certification of an asbestos abatement project. The question presented was whether the claim accrued at the time of the alleged malpractice or upon discovery that asbestos remained in the building. Because the nature of plaintiff’s property damage claim did not fall within the purview of CPLR 214-c, the toxic tort remedial statute of limitations, New York’s high court concluded that CPLR 214 (6) is the appropriate statute of limitations and the action was properly dismissed as untimely. In its complaint, plaintiff alleged that the asbestos remained undetected at the abatement site for 13 years after defendants’ certification of removal. Although the statute embraces an “injury to property,” there is no allegation by plaintiff that the asbestos migrated to a different location, became airborne or friable, or caused illness to any occupants of the building. Where, as here, plaintiff’s property damage claim involves no additional damage to its building since the original implantation of the harmful substance — or, stated another way, where the passage of time has produced no change in the consequences of the presence of asbestos — the injury cannot be said to have resulted from the latent effects of exposure to a toxic substance. Plaintiff’s situation is not analogous to hazardous waste or chemical spill contamination cases where the property damage results from the seepage or infiltration of a toxic foreign substance over time. Here, the harm to plaintiff’s property occurred upon installation of the asbestos in the building and was constant thereafter.

 

Hurwitz & Fine, P.C. is a full-service law firm
providing legal services throughout the State of New York.

 

Newsletter Editor

Kevin T. Merriman

[email protected]

 

Insurance Coverage Team

Dan D. Kohane, Team Leader

[email protected]

Michael F. Perley

Kevin T. Merriman

Phyllis A. Hafner

Audrey A. Barr

 

Fire, First Party & Subrogation Team

James D. Gauthier, Team Leader

[email protected]

Donna L. Burden

Andrea Schillaci

Jody E. Briandi

 

© COPYRIGHT 2003 Hurwitz & Fine, P.C., ALL RIGHTS RESERVED

 

CENTEREACH REALTY, LLC v ESSEX INS. CO.

 

Order, Supreme Court, New York County (Sherry Klein Heitler, J.), entered September 3, 2002, which denied the motion of plaintiffs Centereach Realty, LLC and Legion Insurance Company for summary judgment, granted the cross motion of defendant Essex Insurance Co. for summary judgment declaring that it is not obligated under the subject policy of insurance to defend and/or indemnify plaintiffs in the underlying personal injury action, and otherwise dismissing the complaint, unanimously affirmed, with costs.

 

The policy issued by Essex plainly states that it does not provide coverage for injuries to employees of its named insured, Grandview Contracting Corp. Inasmuch as the underlying lawsuit against Essex's additional insured, Centereach Realty, is brought by an employee of Grandview to recover for personal injuries allegedly sustained in the course of his employment, Essex is not obligated to provide a defense and/or indemnification to Centereach.

 

Nor did Essex fail to provide a timely disclaimer to Centereach in accordance with the requirement of Insurance Law § 3420(d). Although the initial tender of coverage to Grandview was not directly addressed to Essex, Essex responded within seven days after it received the letter, advising that the policy did not provide coverage. Centereach received a copy of the disclaimer letter, which contained language specifically indicating that it would not be provided coverage.

 

MATTER OF PHOENIX INS. CO. v TASCH

 

In a proceeding pursuant to CPLR article 75 to permanently stay arbitration of a claim for underinsured motorist benefits, the appeal is from an order of the Supreme Court, Kings County (Dabiri, J.), dated April 15, 2002, which granted the petition and permanently stayed the arbitration.

 

ORDERED that the order is affirmed, with costs.

 

We affirm the order appealed from on a different ground than the one used by the Supreme Court in granting the petition and permanently staying the arbitration (see Menorah Nursing Home v Zukov, 153 AD2d 13). The relevant provision of the subject insurance policy required that the appellant give written notice of an underinsured motorist claim "as soon as practicable." Thus, the appellant was required to provide timely written notice of the claim for underinsurance benefits as soon as practicable from the date he knew or should have known that the tortfeasor was underinsured (see State Farm Mut. Auto. Ins. Co. v Sparacio, 297 AD2d 284, 285; Matter of Interboro Mut. Indem. Ins. Co. v Callender, 288 AD2d 474; Matter of Eagle Ins. Co. v Bernardine, 266 AD2d 543; Matter of Nationwide Ins. Co. v Montopoli, 262 AD2d 647). The respondent specifically denied the receipt of any letter of notice of intent to file an underinsured claim dated October 4, 1999, which the appellant's attorney had purportedly mailed to the respondent. While a party is entitled to a rebuttable presumption of receipt based on proof of regular mailing, the respondent failed to submit sufficient evidence attesting to the mailing of the letter dated October 4, 1999, or to the existence of an office practice geared to ensure the proper addressing or mailing of this letter (see Nassau Ins. Co. v Murray, 46 NY2d 828, 829; Matter of Francis v Wing, 263 AD2d 432; Azriliant v Eagle Chase Assocs., 213 AD2d 573, 575; Matter of Colyar, 129 AD2d 946, 947). Accordingly, the respondent failed to establish that he provided timely written notice of the underinsured motorist claim, and the petition was properly granted.

 

RITTER, J.P., FEUERSTEIN, McGINITY, TOWNES and COZIER, JJ., concur.

 

MATTER OF GOVERNMENT EMPLOYEES INS. CO. v MORENO

 

In a proceeding to stay arbitration of an uninsured motorist claim, Allstate Insurance Company appeals, as limited by its brief, from so much of an order of the Supreme Court, Nassau County (Trainor, J.), dated May 28, 2002, as, in effect, upon reargument of a prior order of the same court dated January 10, 2001, granting the petition, adhered to the prior determination.

 

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

 

It is not disputed that the appellant issued a policy covering the offending vehicle in question. While the appellant may have properly disclaimed coverage as to the owner of that vehicle, the scope of the policy's coverage extended to permissive users of the vehicle (see Handelsman v Sea Ins. Co., 85 NY2d 96, 100; Nigro v General Acc. Ins. Co. of N.Y., 239 AD2d 474; Matter of Eagel Ins. Co. v Perez, 209 AD2d 695). Since the appellant never properly disclaimed coverage as to the driver of the offending vehicle, coverage for the vehicle existed, and thus, the petition was properly granted (see Allstate Ins. Co. v Durand, 286 AD2d 407; Legion Ins. Co. v Weiss, 282 AD2d 576).

SANTUCCI, J.P., SMITH, LUCIANO and MASTRO, JJ., concur.

 

MATTER OF LUMBERMENS MUT. CAS. CO. v QUINTERO

 

In a proceeding pursuant to CPLR article 75 to stay arbitration of an uninsured motorist claim, the appeal is from a judgment of the Supreme Court, Queens County (Thomas, J.), dated May 21, 2002, which, after a hearing, granted the petition.

 

ORDERED that the judgment is affirmed, with costs.

 

In a proceeding to stay arbitration of a claim for uninsured motorist benefits, the claimants' insurer has the initial burden of proving that the offending vehicle was insured at the time of the accident, and thereafter the burden is on the party opposing the stay to rebut that prima facie showing (see Matter of Eagle Ins. Co. v Tichman, 185 AD2d 884, 886). In this case, at the hearing, the appellants' insurer made a prima facie showing that the offending tractor was insured on the date of the subject accident. In response to such showing, neither the appellants nor the additional respondents offered any probative evidence to rebut that prima facie case. Thus, the Supreme Court properly granted a stay of arbitration of the claim for uninsured motorist benefits on the ground that the offending tractor was insured on the day of the accident (see Matter of Wausau Ins. Co. v Predestin, 114 AD2d 900).

 

We reject the appellants' contention that their insurer should be estopped from denying coverage of their uninsured motorist claims for failure to timely disclaim. An insurer has no obligation to timely disclaim in those situations in which coverage does not exist (see Matter of State Farm Mut. Ins. Co. v Vasquez, 249 AD2d 312). Therefore, the appellants' insurer was not required to timely disclaim, as the uninsured motorist coverage of the policy would not attach unless and until it was established that the offending vehicle was uninsured on the date of the accident (see Matter of Nationwide Ins. Co. v Sillman, 266 AD2d 551, 552).

 

RITTER, J.P., SMITH, GOLDSTEIN and H. MILLER, JJ., concur.

Newsletter Sign-up

Fill in the form to register to receive any of our free electronic newsletters: