Coverage Pointers - Volume XXIV, No. 11

Volume XXIV, No. 11 (No. 632)
Friday, November 11, 2022
A Biweekly Electronic Newsletter


As a public service, Hurwitz Fine P.C. is pleased to present its biweekly newsletter, providing summaries of and access to the latest insurance law decisions from the New York and Connecticut appellate courts and Canadian appellate courts. The primary purpose of this newsletter is to provide timely educational information and commentary for our clients and subscribers.

In some jurisdictions, newsletters such as this may be considered Attorney Advertising.

If you know of others who may wish to subscribe to this free publication, or if you wish to discontinue your subscription, please advise Dan D. Kohane at [email protected] or call 716-849-8900.

You will find back issues of Coverage Pointers on the firm website listed above.

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Dear Coverage Pointers Subscribers:

Do you have a situation? We do love situations. And our goal is that your situations are resolved smoothly and economically.  Actually, we are happiest if we can help you AVOID situations, so we do our best to offer educational opportunities so that you can avoid having to pay a lawyer.  Our issue of Coverage Pointers is attached.

Welcome Aboard!

We are excited to introduce Robert P. Louttit to our Melville office as part of our coverage team. Rob focuses his practice on insurance coverage. Rob brings nearly 20 years’ experience to Hurwitz Fine. Rob has handled a range of insurance coverage matters in his legal career, including litigated and non-litigated matters; insurance coverage appellate work; and has provided advice to his clients and has issued opinions on insurance coverage matters.

In Rob’s spare time, he enjoys spending it with his family, watching sports, and, in particular, watching his sons’ football, soccer, and basketball games. We look forward to the additional coverage expertise he brings to our downstate office. 

Insurance 101 – A Coverage Primer
Third Day Added
Thursday, March 2, 2023: 1:30 PM Eastern, 12:30 PM Central

See the source image


In 2021, during the heart of the pandemic, my good friend, John Trimble, from Lewis Wagner, Indianapolis, and I, scheduled a Zoom continuing education program which we entitled, Insurance 101 – a Coverage Primer for Claims Professionals and Attorneys.  We have been asked to reprise that presentation, so we scheduled a date in January 2023, which was announced in the most recent issue of Coverage Pointers.  That program audience was filled in 72 hours and then added a second date in February, which is now fully subscribed.

That’s the two of us in the photo at the top of this cover note.

So, we’ve added a third day, March 2, 2023, at 1:30 PM Eastern Time, 12:30 PM Central.

Since it is the last scheduled class, we expanded the room to 100.  As of today, we are 50% subscribed in our final day of programming, so if you and/or your staff are interested in enrolling, we recommend that you do so ASAP.

Coverage associates, who are just starting out, might find this program useful.

This is a great opportunity for newer claims professionals, especially those who may be joining your coverage teams, to get a crash course in liability insurance coverage.  The presenters are two old, and seasoned, codgers who love this stuff. 

Simply contact John Trimble or me and we’ll reserve a spot.  

As I write this note on Thursday, I just completed a presentation at the FDCC Insurance Industry Institute in NYC on risk transfer along with my presentation partner, John Trimble.  Great conference, great audience.

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Insurance Coverage Basics for Mediation:

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Recently, Tyler Gerking, partner in the firm of Farella Braun + Martel, and I had the pleasure of presenting on the importance of understanding the role of insurance coverage in mediating cases, as part of the Will Work For Food program. We invite you to listen to the program and donate to your local food bank.  Simply click on the graphic above or here.


Need a mediator?

Coverage mediation is a thing!  Subject matter expertise may be useful.

Hey coverage lawyers.  Hey claims professionals. Have you and a friend, adversary, or lawyer for whom who have respect reached a stalemate on a coverage dispute?  Look, we know each other.  We know that.  We don’t want to litigate every coverage disagreement.  Why?   Because the position we oppose today may be the one we advocate tomorrow.  Face it.  We all understand that.

Let me help mediate your disagreement to see if there is some mutual agreement, we can reach that will not box us into a corner. Reach out to me.  I will be pleased to mediate your dispute.

My partners, Mike Perley and Ann Evanko, are also available to help resolve other challenges.

You don’t want adverse precedent that will bite you next time you might have a slightly different view on coverage issues. You don’t want to spend tens of thousands of dollars to litigate a coverage issue before a motion judge or appellate justice that know as much about insurance coverage as you do about nuclear physics.  For those in the Western District of New York, I am certified by the Court and on the WDNY Mediation Panel as are Mike and Ann.

Try mediation.

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And if that’s not enough, don’t forget the PLRB Claim Conference and Expo in Orlando where I will be speaking on Risk Transfer, this time with John Hanlon, Director, Complex Claims and Litigation at Kemper.


Training and More Training:
Schedule your in-house training for 2023.  Need a topic?  Here are 160 or so coverage topics from which to choose.


We have other firm newsletters to which you can subscribe by simply letting the editor (or me) know, including a new publication, which was created to advise on business and employment law questions:

  • Premises Pointers:  This monthly electronic newsletter covers current cases, trends and developments involving premises liability and general litigation. Our attorneys must stay abreast of new cases and trends across New York in both State and Federal Court and will now share their insight and analysis with you. This publication covers a wide range of topics including retail, restaurant, and hospitality liability, slip and fall accidents, snow and ice claims, storm in progress, inadequate/negligent security, inadequate maintenance and negligent repair, service contracts, elevator and escalator accidents, swimming pool and recreational accidents, negligent supervision, assumption of risk, tavern owner and dram shop liability, homeowner liability and toxic exposures (just to name a few!).  Please drop a note to Jody Briandi at [email protected] to be added to the mailing list.


  • Labor Law Pointers:  Hurwitz & Fine, P.C.’s Labor Law Pointers offers a monthly review and analysis of every New York State Labor Law case decided during the month by the Court of Appeals and all four Departments. This e-mail direct newsletter is published the first Wednesday of each month on four distinct areas – New York Labor Law Sections 240(1), 241(6), 200 and indemnity/risk transfer. Contact Dave Adams at [email protected] to subscribe.


  • Products Liability Pointers:  Whether the claim is based on a defective design, flawed manufacturing process, or inadequate instructions/warnings, product liability litigation is constantly evolving.  Products Liability Pointers examines recent New York State and Federal cases as well as high court decisions from other jurisdictions, keeping our readers up to date with the latest developments and trends, and providing useful practice tips and litigation strategies.  This monthly newsletter covers all areas of product liability litigation, including negligence, strict products liability, breach of warranty claims, medical device litigation, toxic and mass torts, regulatory framework, and governmental agencies.  Contact Brian F. Mark at [email protected] to subscribe.


  • Medical & Nursing Home Liability Pointers.  Medical & Nursing Home Liability Pointers provides the latest news, developments, and analysis of recent court decisions impacting the medical and long-term care communities. Contact Chris Potenza at [email protected] to subscribe.


Peiper on Property and Potpourri:

We take a moment to recognize all our Veterans out there and thank those of you reading this letter for your service of our Country. This includes our own Tom Casella.  Thanks, Tom, for your service.

This week has been a hectic one for sure.  I started in Providence, Rhode Island, where I was honored to be part of the PLRB’s faculty for the Northeast Regional Conference.  We have a few new readers out there because our visit, and we hope you’re enjoying your first edition of CP.  

As you may recall, I presented on tips and strategies for preparation for, and survival of, insurance depositions.  By all acknowledged accounts, the materials were well received, and we hope/trust the folks who joined me left with something useful to apply to their professional lives. 

Shout out, too, to the few who stayed all the way through to 4:30 PM on “get away day.”  I’m not sure I would have given me the same courtesy!

Yet another shout out to Alissha Watley and the rest of the PLRB team.  They really do a tremendous job of putting on great programming.  If you haven’t attended a PLRB event, and particularly, if your company were a member of the organization, we would strongly encourage your participation in the future.

That’s it for now.  I’ll trade in the lectern for a spot on the glass this weekend as my son’s team participates in the Border Battle Showdown. 

See you again in two weeks.

Steven E. Peiper

[email protected]

Independent Woman – 100 Years Ago:

Buffalo Courier
Buffalo, New York
11 Nov 1922


         New York, Nov. 10.—Mary Garden, queen of American prima donnas and erstwhile dictator of the Chicago Opera Co., arrived today on the Aquitania with a new cane in her hand a lot of new enthusiasms in her mind.

         Miss Garden was as vivacious as ever. Even more so, she declared, for, having lost pounds clambering up and down the mountains of Switzerland, she feels “less weighed down with the responsibility,” she said.

         Among the “impressions” she launched at those who greeted her at the dock was:

        “Mules are preferable to men, because they’re more easily managed.”

          Discussing her plans, Miss Garden was vague, except that she understood she was to sing “Carmen” at Chicago soon, leaving, for that city tomorrow.

          But she is not engaged—referring to men—and doesn’t tend to ever be again—referring to opera management. Her mother, Mrs. R. D. Garden, accompanied her.


Wilewicz’ Wide-World of Coverage (featuring Ryan O’Shea):

Dear Readers,

I’m on the road this week (again), so we will jump right into the latest case summary from our own Ryan O’Shea, currently reporting for the Wide World of Coverage:

This week we reviewed a case from the Fourth Circuit involving the blow-off of a defectively installed roof. The insured sought coverage not only for the interior water damages and rental income, but also for the roof itself. The insured relied upon an “ensuing loss” clause as the basis for coverage of defective roof. The Fourth Circuit did not bite, and determined coverage extends to the interior damage and rental loss only.

The court also affirmed the grant of the insurance company’s second motion for summary judgment because the insured did not contend the loss surpassed the policy’s deductible. Thereby, precluding coverage for even the covered losses . . . ~ Ryan

Until next time!

Agnes A. Wilewicz

[email protected]


Death of a Parrot – 100 Years Ago:

The Buffalo News
Buffalo, New York
11 Nov 1922


From the New York Bureau
of the Buffalo Evening News

          NEW YORK, Nov. 11.—Five-hundred-dollar damages was the sum demanded yesterday by Carmine Paranino of Hoboken, for the loss of his pet parrot. He asks the money from Charles W. Wyckoff, a builder and former school trustee, who, Paranino says, shot the parrot in a moment of anger when the parrot interrupted a pinochle game. Wyckoff admits that he was annoyed by the parrot during the game and that he went to get his shotgun, but he denies he killed the parrot. Paranino, however, insists that his neighbor blew the bird to bits.


Barnas on Bad Faith:

Hello again:

First, I want to welcome Rob Louttit, the newest member of our coverage team who will be working out of our Melville Office.  We were happy to get Rob up here earlier this week to meet him and to introduce him to our team.  We are excited about what he can bring to our coverage department going forward.  Drop Rob a note to say hello if you have a moment and be on the lookout for him moving forward.

This week, I have a failure to settle case from Missouri.  The night before trial, assigned defense counsel learned information that allegedly significantly increased the value of the case and presented ethical conflicts.  Counsel advised the insured that he intended to withdraw.  The next morning, counsel appeared on behalf of the insured and participated in settlement negotiations.  The insurer is alleged to have declined to increase its settlement offer in light of the new information, and the insured paid some of its own money to settle the case.  Even though there was no excess judgment or settlement above the policy limits, the court found that the insured had stated a claim for failure to settle sufficient to survive a motion to dismiss.

Brian D. Barnas

[email protected]


Wines and Beer Not in the Clear – 100 Years Ago:

The Buffalo Enquirer
Buffalo, New York
11 Nov 1922

Congress to Organize
in Big Attempt to
Modify Liquor Law

(By the United Press)

          Washington, Nov. 11.—Imbued with high hopes as the result of “wet” gains in the congressional elections, liberal members of Congress will hold a conference shortly after the start of the special session, November 20, to lay plans for an organized campaign for modification of the Volstead act to permit the manufacture and sale of wines and beer.

          This was learned today with the return to Washington of Representative George H. Tinkham of Boston, one of the “wet” leaders in the house.

          Tinkham predicted success for the modificationist movement after the 1924 elections. Tuesday’s elections clearly showed, he declared, that the people are near a revolt against the drastic provisions of the Volstead act.

          The liberal and sane element may prevail in the new congress which comes in next March, but if not then, we surely will win out after the 1924 elections when enough more liberal candidates will be elected to control the congress, Tinkham said.


Kyle's Construction Column:

Dear Readers,

I enjoyed the last couple weeks of warm weather before we head into late fall/winter, and even got in a couple more rounds of golf. Always disappointing to get to the time of the year when it is dark by the time, I leave the office. In sports news, hopefully the Bills can bounce back from last week’s tough loss with a big game against the Vikings this week.

This week’s case involves a declaratory judgment action by an insurer arguing that the “professional services” exclusion precluded coverage for the underlying claims. The underlying action involved a dispute regarding alleged defects and deficiencies in the construction of an apartment complex.

Until next time,

Kyle A. Ruffner

[email protected]


Fraudulent Insurance – 100 Years Ago:

Democrat and Chronicle
Rochester, New York
11 Nov 1922


Automobile Club Secretary Warns
Against Concern in Syracuse.

          George C. Donahue, secretary of the Automobile Club of Rochester, issues a warning to motor car owners of the section against an alleged fake insurance concern at Syracuse. The company sends out agents to sell insurance policies covering all kinds of insurance and claims to protect motorists in every way for the nominal sum of $39.50, Secretary Donahue says.

          The plan used is a duplication of the old “handkerchief” game and the officers of the Automobile Club regret that the club is unable to get in touch with motor car owners in this vicinity before they have been visited by agents selling alleged fake policies, according to Mr. Donahue.

          Officers of the Automobile Club say they have papers to show that the company in Syracuse is not a legitimate insurance company, but merely promises to receive from motorists, who have had accidents, full particulars concerning the accident and then turn it over to a Syracuse attorney, so that he may bring suit if he believes there is any money in the proceedings for him.

          Motorists are urged to refrain from signing up for any kind of insurance with strangers, because there are permanent residential insurance agents of Rochester to whom motorists should go, Mr. Donahue says, for proper and legal insurance.


Fleming’s Finest:

Hi Coverage Pointers Subscribers:

Due to the clocks going back an hour, I grudgingly dragged myself to the gym to run on the treadmill after work this week. Much to my chagrin, it is now dark at 5pm. However, the holidays are quickly approaching (ah!), so I am looking forward to the festivities.

This week’s case comes from the South Carolina Supreme Court. The court considered whether the insured, injured while driving a temporary substitute rental car, could stack her underinsured motorist coverage. The court agreed that the insured could stack due to an ambiguity in the policy language that was construed against the insurer.

Catch you later,

Katherine A. Fleming

[email protected]


Bluebeards Caught Red-handed – 100 Years Ago:

Princeton Daily Clarion
Princeton, Indiana
11 Nov 1922



Bodies of Husbands and Relatives Are
Being Exhumed by the Chicago

(By the United Press)

          CHICAGO, Nov. 11.—Police planned to exhume seven more bodies today in the investigation of the “Mrs. Bluebeard” poison plot involving two women. Five bodies have already been dug up. Analysis revealed large quantities of arsenic in at least two instances.

          Formal charges of murder were placed against Mrs. Tillie Klimek and Mrs. Nellie Koulik, cousins, who, police allege are responsible for the wholesale poisoning of husbands and relatives. Insurance frauds and fear of discovery were the motives for the poisonings which may number twelve, police said.

          Police had nicknamed the women “the twin Mrs. Bluebeards” because of the apparent unconcern of the charges against them.

          Both women refused to discuss the cases and show no interest in the exhuming of their husbands’ bodies. The former is 47 and the latter is 45. Mrs. Klimek was the first arrested after her husband was found desperately ill from arsenic poisoning. He is hovering between life and death.


Ryan’s Capital Roundup:

Hello Loyal Coverage Pointers Subscribers:

As the leaves fall in droves, I am reminded of how much I love this time of year. There is something to be said about the sight, smell, and sounds of a crisp, autumn day. Not to mention its football season.

Today, we have an entry in our Regulatory Wrap-up concerning proposed changes to New York’s groundbreaking cybersecurity regulations. We take a look at which insurance related individuals and entities might fall under extended exemptions.

Until next time.

Ryan P. Maxwell

[email protected]


Deliberate and Defend – 100 Years Ago:

The Buffalo Times
Buffalo, New York
11 Nov 1922

Render County’s
Quickest Verdict

          MAYVILLE, Nov. 11.—The quickest verdict rendered in the Chautauqua County courthouse within the memory of the oldest court attaches was given yesterday by a jury. Three minutes after Justice Charles H. Brown had charged the jury and told them to retire, the jurors rapped on the door of their room and told the officers in charge that they had agreed. In five minutes, the verdict had been rendered. The suit was brought by James H. Simmons against Alton Teemley, both of the Town of Westfield. Two years ago, Simmons and his family went to Florida for the winter. They engaged Teemley and his wife to live on their farm and care for the stock and the home. They sued to recover several hundred dollars for canned fruit and cider which they claimed the Teemleys used without their consent. The defendant denied the use of the fruit and cider and the jury evidently believed him and his wife.


Dishing Out Serious Injury Threshold:

Dear Readers,

Hope everyone had a Happy Halloween. The Fall seems to be spreading by, and we are nearly at Thanksgiving now. Thankfully, the weather has been mild, and we are enjoying a lot of outdoor Fall activities.

I was able to locate one case for this issue. This is from the Second Department pertaining to defendants’ IME doctor failing to properly evaluate plaintiff as to range of motion of certain body parts as well as causation, thereby precluding success of defendants’ motion for summary judgment.


Michael J. Dischley


Her Lungs, Her Choice – 100 Years Ago:

New York Herald
New York, New York
11 Nov 1922


Cigarette Dealer in Women’s
Hotel in Court Case.

Special Dispatch to THE NEW YORK HERALD.

New York Herald Bureau,

          Washington, D. C., Nov. 10.—A strong defense of the right of women to smoke cigarettes was set forth to-day in the Municipal Court by John-Pollock, who runs a cigar stand in the Grace Dodge Hotel, conducted by the Y. W. C. A. for women exclusively.

          Pollock filed a petition asking the court to dismiss a suit begun by the Y. W. C. A to evict him because by his large cigarette sales, he is alleged to be encouraging excessive smoking by women.

          In his petition Pollock asserted that women have a right to smoke as much as they please without interference from the hotel proprietors. He maintained he was doing a splendid service by making it possible for the women to obtain cigarettes or other tobaccos with some degree of privacy.

          Those who manage the hotel contended a morally bad atmosphere had been created by too much smoking. Pollock admitted his sales brought large profits but insisted that the hotel should be compelled to renew his lease for another year.


Lee’s Connecticut Chronicles:

Dear Nutmeg Newsies,

It was a big week for Connecticut insurance coverage opinions. We hit you with three cases this edition – two matters of first impression and a head scratcher. There were others of the mundane variety.

Personally, it was a whirlwind of travel, driving from Connecticut to Buffalo, with a side trip to Fredonia, New York to see a college production of Into the Woods, and then a jump on a plane to West Palm Beach. All sunned, sanded, and exhausted, I’m happy to be back at work so I can rest.

Keep keeping safe,

Lee S. Siegel

[email protected]


Political Tirade – 100 Years Ago:

The Buffalo Enquirer
Buffalo, New York
11 Nov 1922


          IN THE UNITED STATES politeness is the rule at political meetings. Seldom does the opposition interrupt and when it does its spokesmen generally find themselves receiving attention from the police.


          Of late, however, the British system of heckling speakers has appeared and now and then somebody speaks up in support of it. How that system works is told in a London dispatch which says: “The heckling of candidates during their speeches has become so boisterous at the London meetings that in some cases they are abandoned as hopeless… The hecklers not only interrupted continually, but threw Chinese snuff over the audience, arousing such terrible fits of coughing that the orators were forced to conclude their remarks… Empathetic protests are appearing in the newspapers against the unruly elements packing the halls and disrupting order.”

         The American way is better. Heckling should not be permitted to become a practice.


Rauh’s Ramblings:

Hello all,

I hope everyone is having a good week! Following a disappointing Bills loss last week, I am hopeful we will turn things around this week despite some worrisome injury reports. Fingers crossed! Unfortunately, I do not have a case to report on this week but hope to have something for you next time!

Patricia A. Rauh


Sweet or Sour Candy Man? – 100 Years Ago:

The Dispatch
Moline, Illinois
11 Nov 1922

Candy Man Sued
for Alienation of
Wife’s Affections

(By Associated Press Leased Wire)

           Chicago, Nov. 11.—Oscar Bunte, wealthy candy manufacturer, was today sued for $100,000 by Nicholas Schaefer, who charged that the affections of his wife, Mrs. Marribell Schaefer, were alienated by the candy man.

          When she was arrested by federal narcotic agents several weeks ago and taken to the psychopathic hospital, but later released, Mrs. Schaefer said she was an English heiress and Bunte’s ward.

          In his suit, Schaefer charged that the story of the estate was used simply to cover up Bunte’s real motives.


Storm’s SIU:

Hi everyone:

In the words of Professor Hinkle, I have been “busy, busy, busy!”  If you don’t recall who Professor Hinkle is, you need to watch more Christmas specials on TV (hint: the villain in Frosty the Snowman).

Two interesting liability cases this week:

  • Insurer has no duty to defend or indemnify motel where sex trafficking incidents occurred as assault-or-battery exclusion unambiguously precludes coverage for underlying claims.

  • Parents’ hiding evidence (gun) to delay son’s arrest and prosecution for murder is not covered (no occurrence and application of intentional act exclusion) under liability policy when they were sued by the mother of the victim alleging emotional distress.

Go Bills!  See you again in two weeks.  Thank you for tuning in!

Scott D. Storm

[email protected]


Woman in Positions of Power – 100 Years Ago:

Chicago Tribune
Chicago, Illinois
11 Nov 1922


          Cleveland, O., Nov. 10.—Newspaper woman, teacher, investigator of immigration conditions, lawyer, assistant county prosecutor, and judge of common pleas court, are the steps which have led Florence E. Allen to an associate judgeship on the Ohio supreme court, the only woman in the world who will hold such a position.

          Complete unofficial returns, tabulated by The Associated Press, show that Miss Allen has been elected by a plurality of 24,356.

          Miss Allen has been practicing law in Ohio for the last eight years. From 1906 to 1909 she was on the editorial staff of the Cleveland Plain Dealer.

          Her career has been a succession of “firsts.” She was the first woman ever to be appointed an assistant prosecuting attorney in Cuyahoga County, and when elected to the common pleas bench two years ago, was the first woman to sit in a court of general jurisdiction in the country.


Gestwick’s Greatest:

Dear Readers:

I hope everyone had a great Halloween! Each year, Halloween seems to mark the end of the great start to the NHL season typically enjoyed by our Buffalo Sabres. In a typical year, we have a wonderful month of October, and only to be dead in the water by Thanksgiving. This season appears to be no different. Oh well.

To make matters worse, I have nothing noteworthy to report to you from New York State Supreme Courts this week. See you in two weeks!

Evan D. Gestwick – Admission Pending

[email protected]


Deadly Dessert – 100 Years Ago:

The New York Times
New York, New York
11 Nov 1922


Friend of Couple Who Received
Deadly Package Hands Similar
One to Police.

          PHILADELPHIA, Nov. 10.—P. Stewart Clarke of Devon, a law student at the University of Pennsylvania and a friend of the Sterrett family, tonight announced that he had turned over to police a cake in a container similar to that received by the Sterretts.

          It was received through the mail, he said, with a post office box in Lansdowne, Pa., given as a return address. Mr. Clarke said that he knew no one in that town, and after an effort to discover if some acquaintances were tempting a hoax, decided to give the cake to authorities for analysis.

          A report that an escaped lunatic was being sought as the sender of the poisoned cake—which caused the death of W. W. Sterrett, an expert accountant of Deon, and the illness of his wife, was denied tonight by Postal Inspector W. W. Simpson and Major W. Butler Windle, District Attorney of Chester County. The report was that the man sought was an accountant who had been discharged by Mr. Sterrett.

          Major Windle stated that the fugitive was a foreign laborer having no possible interests in common with the Sterretts.


North of the Border:

This week I have the privilege of attending the FDCC’s I-3 (Insurance Industry Institute) at the Sheraton Times Square in New York. This is the first time this amazing program has taken place in person since November 2019.  Approximately 150 insurance industry personnel and defence counsel will be together for a day and a half to discuss key issues facing the P&C industry. A fabulous gathering – one of the best in North America. To say the least, I am looking forward to it – assuming I can get out of my driveway and get to the airport on Wednesday. We have just received over a foot of snow with more on the way.

My article this week makes the point that the optics of the fact pattern must be part of the equation to deny coverage. Enjoy.

Heather A. Sanderson

[email protected]


Cruel and Unusual Punishment – 100 Years Ago:

The Brooklyn Daily Eagle
Brooklyn, New York
11 Nov 1922

(Special to The Eagle.)

          Greenpoint, L. I., Nov. 11—Due to the activity of Deputy Sheriff Fred Booth of Southold an alleged case of unusual cruelty to a four-year-old boy in this place is now in the hands of the authorities for settlement. Angelo Figarello has been arrested and held in $1,000 bail by Justice Charles Corey of Southold, and the child is being treated by the nurses at the Greenport Hospital—the first bright day the lad has seen in more than two years, according to Deputy Sherriff Booth.

          According to the story told to Justice Corey by Mr. Booth and others the little boy had been kept locked in a woodshed all day long every day for two years or more, alone and with little to eat. His little body, even in these zippy fall days, was clothed in nothing except a ragged, soiled shirt. The shirt is now in possession of the authorities to be used in evidence. That the infant had been half starved seemed to be evident from the appearance of his little body.

         When the boy was taken to the hospital the nurses said it as one of the worst cases of that sort they ever saw, but after they had bathed him and fed him a nourishing dinner they found an entirely different looking boy, and it is their opinion that he will never recover and become a healthy normal child.

          It was an anonymous letter that caused Mr. Booth to investigate, and when he did look into that woodshed and saw the conditions, he admits he broke down and cried, it was such a pitiful sight. When Mr. Booth questioned the father, asking him why he was treated that way, he says the father replied that the child was crazy.


Headlines from this week’s issue, attached:

Dan D. Kohane

[email protected]

  • Need More Than Unsubstantiated Claim to Establish Entitlement to Uninsured Motorists Benefits
  • Arbitration Clause in Policy that Provided for Arbitration Over Issues of Allocation of Defense Costs Does Not Apply where Carrier Disclaims Coverage Completely, Based on Fraud
  • No, there Wasn’t. Yes, there Was.  Appellate Court Disagrees with Hearing Office on Factual Issue of Physical Contact in an Uninsured Motorist Claim to Stay Arbitration
  • Failure to Establish That “Open Flame Cooking” and “Open Flame Cooking Methods” Phrases in Application Questions are Unambiguous is Fatal to Insurer’s Summary Judgment Motion
  • Primary Carrier, Not Excess, has Obligation to Defend

Steven E. Peiper

[email protected]

  • Two Year Suit Limitation Clause Affirmed; Untimely Suit also Destroys any Claims of Broker Negligence
  • Judgment Creditor is Limited to 10% of Debtor’s Monthly Disability Payments

Michael J. Dischley

  • Defendant Expert Failed to Opine as to Causation of Plaintiff’s Injuries, thereby Precluding Motion for Summary Judgment


Agnes A. Wilewicz

[email protected]

  • Ensuing Loss Clause Does Not Entitle Insured to Recover for Defective Repairs, Only Limited to Covered Losses


Brian D. Barnas

[email protected]

  • Insured Stated Failure to Settle Claim where it Settled the Underlying Action Partially at its Own Expense


Lee S. Siegel

[email protected]

  • No Free Bite:  Breed Exclusion Upheld
  • Causing a Person's Death by Providing Them with Illegal Drugs is a Potential Accident, and a Defense is Owed
  • Forum Non Conveniens Motion Granted


Kyle A. Ruffner
[email protected]

  • Professional Services Exclusion Precludes Coverage for Claims Arising Out of Deficiencies and Defects in Construction of Apartment Complex


Ryan P. Maxwell
[email protected]

  • DFS Proposes Amendments to Exemptions for Reinsurers and Inactive Insurance Agents/Brokers in Cybersecurity Regulation

Patricia A. Rauh

  • No notable life insurance/ERISA cases to report on this time – check back in two weeks!


Scott D. Storm

[email protected]

  • Insurer has No Duty to Defend or Indemnify Motel Where Sex Trafficking Incidents Occurred as Assault-or-Battery Exclusion Unambiguously Precludes Coverage for Underlying Claims
  • Parents’ Hiding Evidence (Gun) to Delay Son’s Arrest and Prosecution for Murder is Not Covered (No Occurrence and Application of Intentional Act Exclusion) under Liability Policy When They Were Sued by the Mother of the Victim Alleging Emotional Distress


Katherine A. Fleming

[email protected]

  • Insured Driving Temporary Substitute Rental Car Could Stack UIM Coverage Due to Ambiguity in Policy Language


Evan D. Gestwick – Admission Pending

[email protected]

  • Nothing new to report from the New York State Supreme Courts this week. See you in two weeks!


Heather A. Sanderson

[email protected]

  • An “Occupant” of a Vehicle Does Not Include Someone Who is Hanging onto the Driver’s Side Window, Trying to Stop an Auto Theft

All the best.

Hurwitz Fine P.C. is a full-service law firm providing legal services throughout the State of New York and providing insurance coverage advice and counsel in Connecticut.

In addition, Dan D. Kohane is a Foreign Legal Consultant, Permit No. 000241, issued by the Law Society of Upper Canada, and authorized to provide legal advice in the Province of Ontario on matters of New York State and federal law.

Dan D. Kohane

[email protected]

Agnes A. Wilewicz

[email protected]

Patricia A. Rauh

Dan D. Kohane, Chair
[email protected]

Steven E. Peiper, Co-Chair
[email protected]

Michael F. Perley
Agnieszka A. Wilewicz
Lee S. Siegel
Brian F. Mark
Scott D. Storm
Thomas Casella
Brian D. Barnas
Eric T. Boron
Robert P. Louttit
Ryan P. Maxwell
Patricia A. Rauh
Diane F. Bosse
Kyle A. Ruffner
Katherine A. Fleming
Evan D. Gestwick – Admission Pending
Ryan P. O’Shea – Admission Pending

Steven E. Peiper, Team Leader
[email protected]

Michael F. Perley
Scott D. Storm
Brian D. Barnas

Dan D. Kohane
[email protected]

Alice A. Trueman

Jody E. Briandi, Team Leader
[email protected]

Diane F. Bosse

Topical Index
Kohane’s Coverage Corner
Peiper on Property and Potpourri

Dishing Out Serious Injury Threshold
Wilewicz’s Wide World of Coverage

Barnas on Bad Faith

Lee’s Connecticut Chronicles

Kyle’s Construction Column

Ryan’s Capital Roundup

Rauh’s Ramblings

Storm’s SIU

Fleming’s Finest

North of the Border


Dan D. Kohane
[email protected]

11/09/22       Melville v Motor Vehicle Accident Indemnification Corp.
Appellate Division, Second Department
Need More Than Unsubstantiated Claim to Benefits Establish Entitlement to Uninsured Motorists Benefits

The lower court did not err in denying the petition pursuant to Insurance Law § 5218 for permission to commence an action against MVAIC to recover damages for personal injuries sustained and caused by the negligence of an unknown party. Here, although there is no dispute that the petitioner was a qualified person pursuant to Insurance Law § 5202(b), the petitioner failed to sustain her burden of demonstrating that the accident was one in which the identity of the owner and operator of the vehicle was unknown or not readily ascertainable through reasonable efforts. The petitioner's self-serving statement in her petition that there was a third unknown vehicle involved in the accident was insufficient to raise a triable issue of fact, and the court was therefore empowered to make a summary determination.

11/03/22       Endurance American Ins. Co. v. Rockwood Holdings, Inc.
Appellate Division, First Department
Arbitration Clause in Policy that Provided for Arbitration Over Issues of Allocation of Defense Costs Does Not Apply Where Carrier Disclaims Coverage Completely, Based on Fraud

Endurance, an excess insurer, sought a stay of an arbitration demanded by Rockwood to determine Endurance’s obligation to pay litigation costs they incurred in an arbitration brought against them by a nonparty in connection with a corporate acquisition. That prior arbitration ended with a finding that Rockwood had committed fraud in connection with that transaction. Rockwood then settled the dispute before the award could be confirmed.

Following issuance of the arbitration award, Endurance disclaimed all obligation to provide coverage, including defense costs, based on the policy's fraud exclusion, which provides that the insurer is not liable for loss related to a securities claim arising from defendants' fraud, "if a final, non-appealable adjudication in any underlying proceeding establishes such a deliberately fraudulent act or omission."

The parties' coverage dispute does not fall within the narrow arbitration clause of the policy, which provides for arbitration of disputes over the allocation of defense costs.  Endurance claims that insured’s liabilities have been finally adjudicated by an arbitration award, which renders the entire loss noncovered, and that it is not bound by the settlement of the arbitrated dispute without its consent. Since Endurance contends that it is not required to pay for any defense costs because all liabilities are excluded from coverage under the fraud exclusion of the policy, there is no issue of allocation.

Allocation clauses only become relevant in the event that a loss involves both covered and uncovered claims" and thus no issue subject to arbitration under the narrow arbitration clause of the insurance policy. At this juncture, the parties' dispute is not an allocation dispute concerning the insurer's obligation to advance defense costs allocated to a covered claim, but a coverage dispute concerning whether the arbitration award is a final adjudication that triggers the fraud and contract exclusions of the policy.  Rockford argument that plaintiff conceded its obligation to advance defense costs on a current basis by previously allocating approximately $82,000 is unavailing. Defendants have acknowledged that the sole reason plaintiff provided those defense costs was to have the arbitration order issued so that it could determine whether an exclusion applied. Thus, plaintiff's payment of the fee for the arbitration award does not give rise to an allocation question.

11/02/22        Government Employees Insurance Company v. Siouni
Appellate Division, Second Department

No, there Wasn’t. Yes, there Was.
  Appellate Court Disagrees with Hearing Office on Factual Issue of Physical Contact in an Uninsured Motorist Claim to Stay Arbitration

This was an application to permanent stay arbitration of an uninsured motorist (“UM” claim brought by GEICO. The carrier claimed that there was no physical contact between the vehicles, which is an essential element of a UM claim arising out of a hit-and-run accident.  There was a framed-issue hearing and the hearing officer determined that there was no physical contact.

The appellate court disagreed and found that the policyholder met his burden of establishing that physical contact occurred with his testimony that his vehicle struck the base of a light pole after he swerved to avoid and was struck on the rear passenger side of his vehicle by, a vehicle which then left the scene.

11/02/22       Dam Properties Holding Corp v. Union Mutual Fire Ins. Co.
Appellate Division, Second Department
Failure to Establish That “Open Flame Cooking” and “Open Flame Cooking Methods” Phrases in Application Questions are Unambiguous is Fatal to Insurer’s Summary Judgment Motion

After receiving notice of a fire loss at the insured commercial premises, the insurer rescinded the corporation's commercial property insurance policy. The rescission was based upon the insurer's determination that the corporation had misrepresented material facts in its application for the insurance when representing no "open flame cooking" was occurring in the mercantile space of the premises to be insured. The corporation sued the insurer for breach of contract. The insurer answered, counterclaimed for a judgment that the policy was void ab initio due to the material misrepresentations in the application, and moved for summary judgment.  The insurer’s motion was denied by the trial court.

The appellate court's November 2, 2022, Decision & Order holds the trial court properly denied the insurer's summary judgment motion. The Decision & Order states that to establish a right to rescind an insurance policy the insurer must demonstrate the insured made a material misrepresentation. The Decision & Order recites that "[A]n answer to an ambiguous question on an application for insurance cannot be the basis of a claim of misrepresentation by the insurance company against its insured where...a reasonable person in the insured's position could rationally have interpreted the question as he or she did", citing and quoting Garcia v. American Gen. Life Ins. Co of N.Y., 264 A.D.2d 808, 809 (2d Dept 1999).

The appellate court ruled that the insurer “failed to establish...that the [undefined application] terms ‘open flame cooking’ and ‘open flame cooking methods’ were unambiguous under the circumstances so as to support its claim that the [insured] made a material misrepresentation [in its application for the policy]”. The concise Decision & Order did not provide any explanation indicating what specifically either the court or the insured found to be ambiguous about the undefined application terms "open flame cooking" and "open flame cooking methods". The Decision & Order did not specifically explain or recap the underlying facts of "the circumstances" referred to within the Decision & Order. However, the Decision & Order's citation to and quoting from the Garcia case suggests the appellate court likely found the insured's answers to the application questions represented what a "reasonable person in the insured's position could rationally have interpreted" about the undefined application terms "open flame cooking" and "open flame cooking methods".

11/01/22       AVR-Powell C. Development Corp v. American States Ins. Co.
Appellate Division, First Department
Primary Carrier, Not Excess, has Obligation to Defend

Where its policy has been triggered, a primary insurer has a primary duty to defend its insureds, whereas an excess insurer has no obligation to do so

Farm Family's argument, that summary judgment should have been denied because its policy is either excess to American States' or because it and American States are coinsurers, is improperly raised for the first time on appeal and involves factual issues not presented to the motion court.  Even if both American States and Farm Family provided concurrent coverage and are coinsurers, Farm Family would still owe the insureds a primary duty to defend, subject to apportionment of defense costs between the coinsurers.


Steven E. Peiper

[email protected]


11/10/22       Farage v. Associated Ins. Mgt. Corp.
Appellate Division, First Department
Two Year Suit Limitation Clause Affirmed; Untimely Suit also Destroys any Claims of Broker Negligence

Plaintiff appears to have sustained a property loss on August 4, 2014.  However, the lawsuit giving rise to this decision was not filed until August 4, 2020; some six years later.  Associated Insurance Company moved immediately to dismiss on the basis that the loss violated the two-year suit limitation clause in the policy.  In affirming the trial court’s decision grating Associated’s motion, the Court rejected any argument that the suit limitation clause should be relaxed because it took more than two years to complete repairs. In addition, the First Department also noted that any delay in the adjustment process was caused, in part, due to plaintiff’s own lack of cooperation. 

As an alternative argument, plaintiff attempted to argue that she was entitled to proceed with a claim against her broker.  The Appellate Division noted that the loss of coverage here was occasioned by plaintiff’s untimely suit papers, and thus any negligence that may be attributable to the broker is not a proximate cause of the loss.  As such, the claim of broker negligence must too be dismissed. 


11/03/22       Hamway v. Sutton
Appellate Division, First Department
Judgment Creditor is Limited to 10% of Debtor’s Monthly Disability Payments

Plaintiff obtained a sizable judgment against defendant Sutton.  We are advised that Sutton’s primary income is derived from a $18,000/month disability insurance payment issued under a policy administered by non-party Unum.  In an interesting intersection of two statutory provisions, the trial court ruled that only $400 of the $18,000/monthly payout was exempt from enforcement proceedings.

On appeal, however, the First Department clarified the impact of the relevant legal statutes and fashioned a different ruling as a result.  The first section reviewed by the Court was Insurance Law 3212(c)(2) which provides that a judgment creditor may reach up to all but $400 of monthly disability benefits.  It was this statute that the trial court based its initial decision upon. 

The Appellate Division then noted CPLR § 5231(b) which provides that plaintiffs cannot restrain more than 10% from any source.  This, according to the First Department, included disability payments. In harmonizing the two statutes, the Court ruled that a judgement creditor was permitted to collect up to 10% of monthly disability payments, so long as it did not leave the judgment debtor with less than $400 in monthly payments. 

Here, 10% of the defendants $18,000/month payment was $1,800 and that is what plaintiff is entitled to receive.  


Michael J. Dischley

11/09/22       Bruce R. Mahler v. Wilda I. Lewis
Appellate Division, Second Department
Defendant Expert Failed to Opine as to Causation of Plaintiff’s Injuries, thereby Precluding Motion for Summary Judgment

In an action to recover damages for personal injuries, etc., the plaintiffs appeal from an order of the Supreme Court, Suffolk County (William G. Ford, J.), dated February 23, 2021. The order granted the motion of the defendant Wilda I. Lewis for summary judgment dismissing the complaint insofar as asserted against her on the ground that the plaintiff Bruce R. Mahler did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident.

The plaintiff Bruce R. Mahler (hereinafter the injured plaintiff), and his wife suing derivatively, commenced this action, inter alia, to recover damages for personal injuries allegedly sustained by the injured plaintiff in a motor vehicle accident. The defendant Wilda I. Lewis (hereinafter the defendant) moved for summary judgment dismissing the complaint insofar as asserted against her on the ground that the injured plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the accident. In an order dated February 23, 2021, the Supreme Court granted the defendant's motion, and the plaintiff’s appeal.

The Appellate Court found that defendant failed to meet her prima facie burden of showing that the injured plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the accident. The defendant failed to submit competent medical evidence establishing, prima facie, that the injured plaintiff did not sustain a serious injury to the cervical, thoracic, or lumbar regions of his spine under either the permanent consequential limitation of use or significant limitation of use categories of Insurance Law § 5102(d). One of the defendant's experts found significant limitations in the range of motion of the cervical and lumbar regions of the injured plaintiff's spine, and failed to adequately explain and substantiate, with competent medical evidence, his belief that the limitations were self-imposed. The expert's report is also silent as to whether he examined the range of motion of the thoracic region of the injured plaintiff's spine, which was also alleged to have been injured in the accident. Further, the Appellate Court found that defendant failed to establish, prima facie, that the injured plaintiff's alleged spinal injuries were not caused by the accident. Since the defendant failed to meet her prima facie burden, it is unnecessary to determine whether the opposing papers were sufficient to raise a triable issue of fact.

Accordingly, the Appellate Court found that the Supreme Court should have denied the defendant's motion for summary judgment dismissing the complaint insofar as asserted against her.


Agnes A. Wilewicz

[email protected]

10/21/22        Bethany Boardwalk Grp. LLC v. Everest Sec. Ins. Co.
United States Court of Appeals, Fourth Circuit
Ensuing Loss Clause Does Not Entitle Insured to Recover for Defective Repairs, Only Limited to Covered Losses

A hotel (“Bethany”) hired a contractor in 2015 to install a new roofing system, on its North building, that could withstand wind gusts up to 55 mph. Among other components the roof system contains insulation boards and a membrane covering. In 2018, a windstorm with wind gusts up to 39.5 mph caused a partial blowoff of the North building's roof. The membrane peeled back exposing the insulation boards and allowed rainwater to seep into the building’s drywall and carpet. After the loss, Bethany filed a claim with Everest. During Everest’s investigation, a roof inspection report concluded the improper installation of the roof system specifically, improperly glued insulation boards rendered the roof susceptible to uplift pressures caused the loss. Based upon this report, Everest disclaimed coverage under the faulty workmanship exclusion.

Bethany brought an action, but all parties agreed to stay discovery and resolve the issues of coverage and liability under the Everest policy. In doing so, Bethany agreed to accept the findings and conclusions of the roof inspection report as fact. The clause at issue is an “ensuing loss” clause, which states “if an excluded cause of loss that is listed in 3.a through 3.c results in a Covered Cause of Loss, [Everest] will pay for the loss or damage caused by that Covered Cause of Loss.”

In granting partial summary to Bethany, the district court found Everest need not repair the building’s damaged roof because it is an excluded cause of loss, however, Everest must cover the interior damage and lost rental income caused by the windstorm. Everest eventually filed a second motion for summary judgment on the issue of the covered losses not exceeding the policy’s deductible, thereby precluding coverage. The district court granted Everest’s second motion because Bethany failed to dispute whether the interior damages exceeded the policy’s deductible.

Following this decision, Bethany appealed the partial denial of summary judgment, the denial to reconsider the grant of Everest’s second motion for summary judgment, and the denial of a motion to amend its complaint.

The Fourth Circuit affirmed the district court’s findings. Bethany’s partial summary judgment appeal focused on the “ensuing loss” clause, and essentially argued that “a covered cause of loss contributed concurrently with an excluded cause of loss is sufficient to provide coverage for all damages to the building that resulted from the windstorm.” Therefore, Everest must insure the entire loss, including the damaged roof. A novel issue before the court, it recognized a split among the circuits but determined that both approaches reach the same outcome. The majority approach finds an ensuing loss clause does not cover damages resulting in part from a defect when the risk raised by the defect comes to pass. While the minority approach will provide coverage for damages by a covered cause of loss, even when an excluded loss contributes to the damages, but not for costs of repairing the excluded loss.

The Fourth Circuit reasoned under the majority approach the roof is not covered because the very risk implicated, a blow-off, occurred and excludes coverage. It also considered that under the minority approach the roof would still not be covered because faulty installation is an excluded loss, but the interior water damage is still covered. In reaching its determination the court relied on the parties’ agreement to accept the roof inspection report as fact. The same report that concluded the roof’s insulation boards made the roof susceptible to uplift pressure.

As for the denial of Bethany’s motion to reconsider Everest's second motion, the court found no abuse of discretion under Federal Rule of Civil Procedure 54(b). It determined Bethany’s motion relied on evidence readily available throughout the proceedings. Bethany also failed to provide any contrary controlling precedent supporting its position. The Fourth Circuit also found the leave to amend was futile and would unduly prejudice Everest. Bethany argued it was entitled to litigation fees for its suit against the roofing contractor in parallel state litigation based upon the collateral litigation doctrine. However, the court found it did not apply because Bethany waited over a year to initiate that action; and prejudice would occur because it would allow Bethany to produce additional evidence not available to Everest because the parties agreed to stay discovery in the coverage and liability case.


Brian D. Barnas

[email protected]

11/08/22       Pets Alone Sanctuary v. Midwest Family Mutual Ins. Co.
United States District Court, Eastern District of Missouri
Insured Stated Failure to Settle Claim where it Settled the Underlying Action Partially at its Own Expense

Plaintiff had a CGL policy with Midwest.  In December 2018, Plaintiff filed a defamation and civil conspiracy action against three defendants.  The three defendants filed counterclaims against Plaintiff and several of Plaintiff’s board members, alleging abuse of process, malicious prosecution, and civil conspiracy.  Plaintiff reported the counterclaims to Midwest, and Midwest acknowledged coverage and assigned counsel to defend the counterclaims.

The evening before trial, assigned counsel communicated information to Midwest that could significantly increase the value of the claims.  Twelve hours prior to trial, counsel informed Plaintiff that newly acquired information impacted the defense and raised potential ethical issues.  Plaintiff was advised that counsel would seek to withdraw the next morning.  On the morning of trial, counsel represented Plaintiff in settlement negotiations.  Midwest refused to increase its offer beyond what it had allocated toward settlement prior to the correspondence about the increase in value.  The parties settled the case for an amount greater than Midwest’s offer, and Plaintiff used its own funds to pay the difference.

Plaintiff filed a lawsuit alleging that Midwest breached the contract by failing to fully defend the counterclaims.  It also alleged that Midwest breached its duty to settle.  Midwest moved to dismiss the failure to settle claim.

First, the court concluded that Plaintiff had not stated a claim that Midwest breached the duty to defend.  Midwest acknowledged that the claim was covered and defended the action through assigned counsel.  It was only after defense counsel learned of ethical issues associated with the defense that a motion to withdraw was contemplated.  The refusal to defend the case at trial was based on counsel’s own professional judgment and not any improper instructions from the insurer.

However, the court declined to dismiss the failure to settle case.  Under Missouri law, an excess judgment is not a necessary element of a bad faith failure to settle claim.  The insurer can breach its duty to protect the insured's financial interest whether the breach results in a settlement or judgment within the policy limits or in excess of the policy limits.

Plaintiff alleged that Midwest withheld payment for a covered loss and demanded Plaintiff contribute its own funds to settle the claim to avoid paying a potentially significant damages award.  An insurer who refuses to fully indemnify a settlement covered under its policy may be liable for damages flowing from its failure to settle.

Midwest also argued that Plaintiff failed to state a failure to settle claim because a settlement was reached.  Plaintiff voluntarily used its own funds and was not exposed to an excess judgment.  However, under Missouri law, an insured’s settlement of the underlying action does not negate an insured’s action against the insurer for failure to settle.  The insurer's duty is to protect the insured financial interests, which are impacted by an insurer's breach of duty” whether the insured goes to trial or ultimately settles “to protect itself from further liability.


Lee S. Siegel

[email protected]

10/25/22       Liberty Ins. Corp. v. QBE Ins. Corp.
Superior Court of Connecticut (Hartford)
No Free Bite:  Breed Exclusion Upheld

A pit bull was co-owned by sisters, separately insured by Liberty and QBE. The Glastonbury dog bit someone and sued the Liberty insured sister. Liberty tendered to QBE, but QBE denied coverage. Liberty defended, settled on behalf of both sisters, and then sued QBE for its share of the defense and settlement. QBE moved for summary judgment, arguing that its policy provided a clear and unambiguous dog breed exclusion precluding coverage for pit bulls.

Liberty argued, in a case of first impression, that the QBE breed specific exclusion violates Connecticut public policy and is “inapplicable to the circumstances where the QBE-insured was ‘keeper’ of the dog and, thus, strictly liable under the Connecticut dog bite statutes. Liberty argued that Connecticut public policy is reflected in its statute prohibiting municipalities from adopting “breed-specific dog ordinances [,]” General Statutes § 7-148 (c) (7) (D) and excluding specific breeds from coverage undermines Connecticut's policy of strict liability for dog bites.

The court made quick work dispensing Liberty’s argument. “The court finds no support in law or logic for Liberty's argument that an unambiguous exclusion from coverage for injuries caused by pit bulls in unenforceable or inapplicable as against public policy… [the Legislature] has chosen not to prohibit breed-specific exclusions in homeowners insurance policies.”

10/31/22       Acceptance Indemnity Ins. Co. v. Migneault, et al
United States District Court, District of Connecticut
Causing a Person's Death by Providing Them with Illegal Drugs is a Potential Accident, and a Defense Is Owed

In another case of first impression, the district court denied the insurer’s motion for summary, finding a duty to defend allegations that the defendants procured illegal drugs leading to the underlying plaintiff’s death. The defendants, owners of Sam’s Food Store—a chain of convenience stores throughout Connecticut—were sued by the decedent’s estate, claiming that the defendants used their position with Sam’s Food Store to procure illicit drugs, sold them to the decedent, causing her death. The underlying complaint alleged, among other things, that the owners failed to supervise and monitor the store, allowing it to be used to conduct illegal activities, including the sale of tobacco to minors and the sale of illegal drugs.

Acceptance issued a commercial general liability policy to Mohammad Iqbal d/b/a Sam's Food Store. Although the court does not cite the policy form, its summary indicates that it is a standard CGL cover. The court wrote that the policy insures “against qualifying damage arising out of ... [t]he ownership, maintenance, or use of” Sam's Food Store.” The policy “provides coverage for “bodily injury” and “property damage” only if they are caused by an “occurrence,” which the policy defines as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” The policy also contains a standard expected or intended exclusion.

The court and parties agreed that the duty to defend hinged upon whether the underlying complaint alleged an occurrence, i.e., was the conduct intentional or accidental. Defining an accident as “an unintended and unforeseen injurious occurrence;’ ‘an occurrence for which no one is responsible’; and ‘an event of unfortunate character that takes place without one's foresight or expectation”, the court held that the complaint triggered a defense obligation.

Acceptance argued that the provision of the illegal drugs was the last event in the causal chain and, therefore, that conduct is the potential accident. “Because Imran “knowingly and purposefully provided Elle Migneault with illegal substances,” … Imran's actions “would be intentional conduct under the law ... that is so inherently harmful that the resulting damage is unarguably foreseeable, allowing this court to infer the necessary harmful intent.” Acceptance relied on State Farm Fire & Cas. Co. v. Tully, 322 Conn. 566, 574 (2016), which found that allegations of sexual abuse are inherently not accidental. But the insureds argued Tully was inapposite to the instant facts. The court agreed.

[T]he case is clearly distinguishable; intentionally grabbing a young girl's breast and buttocks are not comparable to the provision of drugs, because the harm in the former is instantaneous and undeniably foreseeable, whereas the harms caused by the ingestion of drugs are varied and not necessarily all intended—there is a difference, for example, between providing someone with marijuana or fentanyl. Defendant Migneault relies on this latter argument to contend because “[i]t is also plausible that defendant Imran lqbal did not realize what he was providing to Elle Migneault was lethal or even potentially lethal,” her death may still be an accident depending on the facts adduced at trial.

The district court acknowledged that this case was one of first impression. “There is no precedent in Connecticut directly addressing whether causing another person's death by providing them with illegal drugs is considered an “accident” for purposes of a liability insurance policy,” After examining Connecticut’s varied decisional authority, it concluded that, “death caused by a drug overdose will only be an expected or intended harm if either the provision of drugs is so “inherently harmful” that death by overdose would be a natural consequence, or Imran Iqbal had actual knowledge that the drugs were harmful enough that Elle Migneault might perish as a result of taking them.”

The court concluded that it lacked sufficient evidence, rejecting Acceptance’s argument that the sale of illegal drugs, alone, is not an accident. “Without details on what kind of drugs Imran provided, in what quantity, and under what circumstances, Plaintiff has not met its burden in showing that there are no genuine issues of material fact in dispute.” Moreover, the court held that the allegations of failure to supervise were covered even if the employee’s acts were intentional. The claim of negligently failing to monitor the store to prevent illegal activity trigger the duty to defend.

10/18/22       Earthstone, Inc. v. Travelers Cas. Ins. Co. of Am.
Superior Court of Connecticut (Hartford)
Forum Non Conveniens Motion Granted

Travelers successfully moved to dismiss this property insurance dispute, without prejudice. The matter involved claims of wind-driven hail damage to an Indiana commercial property, owned by an Indiana corporation, with its principal place of business in Indiana. Travelers argued that the parties’ representatives, consultants, and experts possessing discoverable information are all based in Indiana. The only connection to Connecticut is that Travelers is headquartered in Hartford.

The court undertook Connecticut’s four step process in conducting a forum non conveniens analysis (is there an adequate alternative forum, the presumption against disturbing the plaintiff’s choice of forum, public interests, and whether the action can be reinstated in the foreign forum). The court found that the private factors – ease of access to proof, availability of subpoena power, the possibility of viewing the accident scene, enforceability of a judgment, the obstacles to a fair trial, and other practical considerations—outweighed the plaintiff’s choice of forum.

[Ed. Note: One must ask themselves, however, why Travelers would want to move from a carrier friendly jurisdiction like Connecticut to decidedly unfriendly Indiana. Perhaps it was to knock Nuzzo & Roberts, Earthstone’s counsel, off the case.]


Kyle A. Ruffner

[email protected]

11/02/22       Colony Ins. Co. v. Coastal Constr. Mgmt., LLC
United States District Court for the Middle District of Florida, Tampa Division
Professional Services Exclusion Precludes Coverage for Claims Arising Out of Deficiencies and Defects in Construction of Apartment Complex

In the underlying state court action, Rosalyne Holdings, LLC filed an action against WPC III, LLC. Rosalyne’s complaint alleged that Rosalyne hired an architect for the construction of an apartment complex as well as a project developer and a general contractor, WPC. The project developer engaged Coastal Construction Management, LLC under a Professional Services Agreement to provide construction management services as a construction manager and construction consultant. Rosalyne ultimately removed those services from the project developer and contracted directly with Coastal. Rosalyne brought action against WPC, and later added the architect and Coastal as defendants, contending that the completed project exhibited numerous defects and deficiencies.

Coastal was insured under two commercial general liability policies issued by Colony, which offered a defense to the insured under a reservation of rights. Colony initiated this declaratory judgment action against the Rosalyne and the underlying defendants seeking a declaration that it had no duty to defend or indemnify Coastal for the claims asserted in the underlying complaint. Colony moved for judgment based on an exclusion in the policy for professional services.

The professional services exclusion provided that the insurance does not apply to any “bodily injury”, “property damage” or “personal and advertising injury” arising out of the rendering or failure to render any professional service. “This includes but is not limited to inspection, supervision, quality control, architectural or engineering activities done by or for you on a project on which you serve as a construction manager, and engineering services.” While the policies did not expressly define the term “professional services”, the court held that the terms “professional” and “professional services” have a commonly understood meaning: professional services are those that require a high degree of training or proficiency or involve specialize knowledge, skill, or labor that is primarily mental rather than physical.

The Complaint alleges that Coastal was engaged as a construction manager to provide construction management services on an apartment complex. The complaint also alleged, among other things, that Coastal undertook and breached duties to make site inspections, to be responsible for coordinating and supervising management and administration of the construction project, and to exercise the reasonable degree of care, skill, knowledge, and judgment in the performance of its services that is ordinarily employed by building professionals. The court held that as a matter of common sense, the management, supervision, and quality control activities alleged in the complaint in the context of a construction project required specialized skill, training, and or experience. Therefore, the only reasonable conclusion is that Rosalyne’s claims arise out of the failure to render a professional service and therefore fall within the scope of the policy’s exclusion.

Rosalyne further contended that the language of the policy required that before the exclusion applied, it must be determined that Coastal performed these functions as a “construction manager” as opposed to a construction consultant. The court rejected this argument, holding that the complaint expressly alleged Coastal acted as a construction manager and construction consultant. Further, the court explained that the exclusion does not limit the meaning of professional services, and that inspection, supervision, and quality control were precisely the types of activities Rosalyne’s complaint alleges Coastal undertook to perform.

Accordingly, the court held that there was no coverage under the Colony policies for the claims asserted in Rosalyne’s complaint in the underlying action, and Colony had no duty to defend or indemnify Coastal. Colony’s motion for judgment on the pleadings was granted and Rosalyne’s motion to dismiss Colony’s request for a declaratory judgment was denied.


Ryan P. Maxwell
[email protected]

Regulatory Wrap-Up

11/09/22       Proposed Amendment to Cybersecurity Regulation
Department of Financial Services
DFS Proposes Amendments to Exemptions for Reinsurers and Inactive Insurance Agents/Brokers in Cybersecurity Regulation

On Wednesday, DFS announced proposed updates to its first-in-the-nation cybersecurity regulation. DFS’s original 2017 regulation established a model regulatory framework for cybersecurity protection of regulated entities that is now used by both federal and other state financial regulators.

There are numerous changes that have been proposed, but principally with regard to the insurance industry, we note that the proposed changes extend the list of entities exempted from the requirements of Part 500 to include accredited reciprocal jurisdiction reinsurers pursuant to 11 NYCRR Part 125 and individual insurance agents who are placed in inactive status under Insurance Law § 2103. The proposed amendment also exempts individual insurance brokers subject to Insurance Law § 2104 who do not otherwise qualify as a covered entity and do not use any information systems, are without access to nonpublic information (“NPI”) and have not been compensated for soliciting, negotiating or selling any insurance or annuity contract or in placing risks or taking out insurance on behalf of another for at least one year.

DFS suggests that this amendment may decrease costs for these reciprocal jurisdiction reinsurers and inactive insurance agents and brokers, provided they do not otherwise qualify as a covered entity.

Maxwell’s Minute: The new exemption for inactive individual insurance brokers was added in response to requests from several commenters on following DFS’s post of a draft of the amendment on its website on July 29, 2022, for pre-proposed outreach. Why do I highlight this? DFS is requesting comment on this now officially proposed rulemaking by January 9, 2023, and it is clear that the agency is open to insurance industry suggestions that make sense. So let your voices be heard. Comments can be made by emailing Joanne Berman at [email protected].


Patricia A. Rauh

No notable life insurance/ERISA cases to report on this time – check back in two weeks!


Scott D. Storm

[email protected]

10/28/22       Nautilus Inc. Co. v. Motel Management Services, Inc., et al  
United States Court of Appeals, Third Circuit
Insurer has No Duty to Defend or Indemnify Motel Where Sex Trafficking Incidents Occurred as Assault-or-Battery Exclusion Unambiguously Precludes Coverage for Underlying Claims

These consolidated appeals concern denials of insurance coverage based on an assault-or-battery exclusion in a hotel's general liability insurance policy. Three women sued the hotel in state court for permitting them to be trafficked for commercial sex on its premises. The hotel's insurance provider refused to defend or indemnify the claims because the hotel's policy excluded claims "arising out of any assault or battery."  To confirm its position, the insurance company filed declaratory judgment actions against the hotel and the women, and in each case, the District Courts issued judgments declaring that the underlying sex trafficking claims fell within the scope of the assault-or-battery exclusion. The 3rd Circuit affirms.

The Neshaminy Inn had a general commercial liability insurance policy with Nautilus. Under the terms of the policy, Nautilus had "no duty to defend or indemnify [Neshaminy Inn] in any action or proceeding alleging damages arising out of any assault or battery," meaning "[a]ll causes of action arising out of any assault or battery" (emphasis added). And the exclusion reached "[a]ny act or omission in connection with the prevention or suppression of such acts, including the alleged failure to provide adequate security." 

Neshaminy Inn sought coverage under its policy in response to three civil lawsuits in which women alleged victimization at the hands of a sex trafficker who advertised them online and sold them for sex several times a day at the Neshaminy Inn.  The sex trafficker kept them dependent on him by shooting them up with heroin and forcing them to smoke crack cocaine in between their customers, causing them to show outward signs of impairment while on the premises. He also treated them in a "visibly . . . aggressive manner" that further instilled a sense of fear and anxiety in them. Each suit sought compensatory and punitive damages for Neshaminy Inn's negligence in failing to prevent or disrupt the alleged human trafficking and for its violations of statutory duties under the Pennsylvania Human Trafficking Law, 18 Pa. Cons. Stat. § 3051.

Nautilus initiated this declaratory judgment action.  In this case, the decisive language of the insurance policy excludes all claims "arising out of any assault or battery." The policy does not define the terms ‘assault’ or ‘battery’, but they are legal terms of art that receive their well-defined meanings under Pennsylvania law.  An ‘assault’ involves intentionally placing another person in "imminent apprehension of a harmful or offensive bodily contact."  And the term ‘battery' refers to "a harmful or offensive contact with the person of another" absent the other's consent. 

Although Pennsylvania courts strictly construe policy exclusions against the insurer, under the four-corners rule, the assault-or-battery exclusion unambiguously applies to the underlying claims against Neshaminy Inn. Each victim alleged that their traffickers treated them in an aggressive or violent manner and made them feel a sense of fear and anxiety while being trafficked. Selling the women for sex under these circumstances qualified as assault because it placed them in imminent apprehension of a harmful or offensive bodily contact. Similarly, the allegations in each of the complaints suffice for battery: by using force and drugs to compel the women's participation in the sex trade, the traffickers subjected the women to harmful or offensive bodily contact without their consent.

Neshaminy Inn offers two counterarguments, but neither has merit. First, it posits that sex trafficking may occur without violence, and thus allegations of sex trafficking alone do not establish an assault or battery. But the four-corners rule does not involve an abstract elemental comparison akin to the categorical approach; instead, it assesses whether the particular factual allegations in a specific case fall within the precise terms of an insurance policy. And as explained above, in each of their pleadings, the women alleged injuries caused by an assault or battery. Second, Neshaminy Inn argues that the women could not have been battered because they consented to their role in the sex trade. But the term ‘consent' in this context is best understood as consisting of more than mere assent, or the act of agreeing; it requires the agreement to be both voluntary and intelligent.  And here the underlying allegations of modern-day slavery — facilitated by forced drug use, violent criminal aggression, physical injuries, and a climate of fear and anxiety — eliminate any possibility that the women voluntarily and intelligently agreed to the conditions of their own trafficking.

Because the assault-or-battery exclusion unambiguously applies to the underlying sex trafficking claims, the District Court in each case correctly held that Nautilus has no duty to defend, and therefore no duty to indemnify, Neshaminy Inn.  Accordingly, those judgments will be affirmed.

10/31/22       Rosenberg v. Hudson Ins. Co. and Chubb Indemnity Ins. Co.
United States District Court, W.D. Pennsylvania

Parents’ Hiding Evidence (Gun) to Delay Son’s Arrest and Prosecution for Murder is Not Covered (No Occurrence and Application of Intentional Act Exclusion) under Liability Policy When They Were Sued by the Mother of the Victim Alleging Emotional Distress

Plaintiffs’ motions for Judgment on the Pleadings seeking declaratory judgment for defense and indemnification from insurers denied.  In the underlying personal injury action, Rouse alleges that the Rosenbergs' son, Adam, invited Rouse's son, Christian, to the Rosenbergs' residence, whereupon he murdered Christian with a handgun owned by the Rosenbergs.  Adam then allegedly dragged Christian's body across the roadway and hid it in a wooded public park.

Ms. Rouse alleges that Adam either confessed and gave the gun to the Rosenbergs, or that the Rosenbergs found the handgun and knew that, for a variety of reasons, it was "likely to be evidence of a crime committed by their son Adam."  According to the Rouse Complaint, at some point the Rosenbergs gave the handgun to Laux, their marriage counselor, "in an effort to prevent or delay the arrest and prosecution of Adam.  Laux then allegedly turned the gun over to the investigating homicide detectives, telling them that she found the handgun "on a trail ... while walking her dog," rather than revealing that the gun came from the Rosenbergs. 

Rouse averred that, as a result of the above actions, the Rosenbergs and Laux "delayed the police investigation and ultimate discovery of Christian's decayed remains.  As a result, Rouse allegedly experienced "the natural fear and severe emotional distress a mother emotionally close to her young adult son would experience during that period of time."  The Rouse Complaint contains a single count against Rosenbergs for intentional infliction of emotional distress.  

Chubb argues that the Rouse Complaint does not allege a "personal injury" caused by an "occurrence" within the meaning of its policy.  Chubb contends that "personal injury" includes "shock, mental anguish, or mental injury" and that "occurrence" is defined, in relevant part, as an "accident."  It alleges that coverage does not apply because the acts the insureds are accused of committing are intentional and not accidental or fortuitous.

Here, a careful reading of the factual allegations of the Rouse Complaint, the language of the policy, and the case law regarding "occurrence" and "accident" leads to the inevitable conclusion that the "Personal Injury" suffered by Ms. Rouse under her IIED claim was not caused by any "Occurrence" under the Chubb Policy. Ms. Rouse's complaint is rife with factual allegations that cannot be described as fortuitous or accidental. The Rouse Complaint alleges that the Rosenbergs found the handgun, knew it was likely evidence in Adam's crime, and they transferred possession of the gun to their marriage counselor for the purpose of preventing/delaying Adam Rosenberg's arrest and prosecution. As a result of these alleged actions and inactions, the police investigation and discovery of Christian's remains were delayed. All of these alleged actions or inactions demonstrated that the Rosenbergs acted with the intent to accomplish their particular goal, i.e., to prevent and/or delay Adam's prosecution. Such alleged conduct presents a straightforward example of actions that do not fit within the realm of accidental.

Conclusory allegations of recklessness do not convert the Rosenberg's actions into occurrences or accidental to trigger coverage in this case. In Pennsylvania, the plain meaning of recklessness requires an awareness of one's conduct that stretches beyond accidental in order to fit the meaning of "occurrence." Although reckless conduct can support an IIED claim, in the present case, conclusory allegations of "recklessness," or its other iterations does not transform the Rosenbergs' action into an "occurrence" to trigger coverage under the Chubb Policy. Conclusory allegations aside, each act by the Rosenbergs, as alleged within the Rouse Complaint, demonstrates their intent, awareness, and/or conscious purpose to accomplish their intended result, i.e., to prevent or delay the arrest and prosecution of their son. For purposes of assessing insurance coverage, whether or not the Rosenbergs had any intentional or reckless state of mind, vis-à-vis the causal effect upon Ms. Rouse's emotional status, is not relevant. Therefore, based upon the foregoing, the "personal injury" alleged by Ms. Rouse is not an "occurrence" that would trigger Chubb's coverage obligations under its policy.

Pennsylvania courts interpret the phrase "arising out of" in policy exclusions in a very broad manner to mean a casual, "but for" relationship.  If the alleged injuries would not have happened but for the excluded conduct, the injuries "arise out of" the conduct.  The application of an exclusion also does not depend on whether the insured intended the injury in question. A complaint's stated cause of action is not determinative in coverage analysis. Instead, a court must look at the factual allegations contained in the complaint.  Courts have rejected coverage where the factual allegations of intentional, reckless, and wanton conduct, in the Complaints do not support negligence or accidents. 

Here, the "intentional acts" exclusion precludes coverage for the conduct described in the Rouse Complaint. The "arising out of" acts described in the Rouse Complaint stem from intentional acts of Adam Rosenberg killing Christian Moore-Rouse and out of the alleged actions by the Rosenbergs in intentionally transferring possession of the murder weapon, delaying the investigation, and delaying the discovery of Christian's body. Said acts, under the theory espoused in the Rouse Complaint, are the "but for" causes of Ms. Rouse's emotional distress. Just as in the "occurrence" analysis above, the Rosenbergs and Ms. Rouse's arguments regarding the recklessness component are unavailing. The Rouse Complaint offers no more than a legal conclusion regarding recklessness absent any factual allegation that would resemble an unintentional act. Therefore, after applying the definitions of "arising out of" and "but for" causation, the allegations in the Rouse Complaint would exclude the Rosenberg's from coverage under the Chubb policy. 

Analysis for the Hudson policy generally follows the same as above.

Katherine A. Fleming

[email protected]

11/02/22       State Farm Mut. Auto. Ins. Co. v. Windham
South Carolina Supreme Court
Insured Driving Temporary Substitute Rental Car Could Stack UIM Coverage Due to Ambiguity in Policy Language

Within the span of only six days and through no fault of her own, Myra Windham (“Windham”) was in two car accidents. The first, on September 29, 2012, rendered her car inoperable. Consequently, on the date of the second accident, October 5, 2012, she was driving the rental car provided to her through the insurance of the first accident's at-fault driver. In the second accident, Windham sustained injuries that exceeded the tortfeasor's liability insurance and sought to stack her UIM policies. Windham was insured under five separate policies with State Farm at the time of the second accident. Though she was permitted to collect under one UIM policy, State Farm denied she could stack. Windham paid for the maximum UIM coverage on each vehicle.

The parties stipulated the rental car in question meet the definition of a "temporary substitute car" as defined in Windham's State Farm policies. Further, the parties stipulated the rental car was not a vehicle shown under the "YOUR CAR" heading of the declarations page on any of the policies issued to Windham or her husband, nor did the car meet the definition of "owned by" in the policies.

Upon cross-motions for summary judgment, the circuit court found the policy's "not owned by" language controlled and thus stacking was prohibited. The court of appeals reversed, relying on a separate policy provision that states when a car is both a non-owned vehicle and a "temporary substitute car," it is considered a temporary substitute car only.

Stacking enables an insured to recover under more than one policy. In South Carolina, an individual must be a Class I insured in order to stack. A Class I insured is an insured or named insured who has a vehicle in the accident. An insured is a Class II insured if none of his vehicles are involved in the accident. The South Carolina Supreme Court had previously recognized that an insured’s vehicle means something less than ownership and held that Class I status, and not ownership, is the determinative measure of an insured's ability to stack. The Supreme Court looked to the language of the policy to determine whether the parties intended Windham’s relationship to her rental car to be sufficient to render her a class I driver, able to stack.

State Farm argued that only owned vehicles or those listed as "your car" on the declarations page can stack, and there was no basis in the policy for finding that a temporary car is an owned vehicle under the policy. Windham argued the label temporary substitute car implies it took the place of her owned car for the duration of its temporary use. State Farm claimed the policy intended to treat a temporary car as a non-owned car, and it argued that the legislature intended ownership to be a prerequisite to stacking in most cases.

However, the Supreme Court found that while normally all temporary cars would be considered non-owned because they are by their definition not owned, the policy ostensibly exempted them from this consequence by denominating them temporary substitute cars only. Since the policy clearly stated that temporary substitute vehicles were not to be considered non-owned, both a finding of coverage and a finding against coverage could be reasonably supported by a reading of the policy language concerning non-owned and not non-owned. Because both parties offered reasonable interpretations of the policy language, the Supreme Court believed an ambiguity existed, that ambiguity was construed against the drafter. Accordingly, the Supreme Court agreed that Windham could stack.


Evan D. Gestwick – Admission Pending

[email protected]

Nothing new to report from the New York State Supreme Courts this week. See you in two weeks!


Heather A. Sanderson

[email protected]

10/18/22       D'Andrea v. Economical Mutual Insurance Company
2022 ABCA 337, Alberta Court of Appeal

An “Occupant” of a Vehicle Does Not Include Someone Who is Hanging onto the Driver’s Side Window, Trying to Stop an Auto Theft

I seldom report on auto cases but this one is worthy of attention.  This is a case where the facts that sat on the proverbial coverage fence cried out for coverage. The insurer opted to deny, and the courts forced the insurer to reverse its decision.

Teresa d’Andrea noticed that a stranger, later identified as Stokes, had gotten into her car, and was starting to drive away with it. The driver’s side window was open. Teresa raced to the driver’s door of her car and managed to lean into the window to try to stop the theft. Somehow, she was dragged about 40 feet until the vehicle veered out onto the street and accelerated, causing her to fall to the pavement. Teresa suffered facial injuries and an injury to her right leg.

As an Alberta resident who was injured by a vehicle in Alberta that was being driven by a person without the consent of the registered owner, Teresa was entitled to claim from the Alberta Motor Vehicle Accident Claims Fund. However, she would only be entitled to receive amounts up and including $200,000 from that Fund as that is the minimum limits of coverage in Alberta that all registered vehicles must carry. The Fund offers entitlement up to that level.

However, Teresa’s vehicle was insured under an Alberta standard auto policy issued by Economical Mutual Insurance Company. That policy was endorsed with an SEF 44, Family Protection Endorsement. If Teresa’s claim assessed at more than $200,000, then, under the SEF 44 endorsement, Teresa would be able to claim the full assessed value of her claim for injuries up and including the difference between what she received from the Fund and her own policy limits. However, to qualify for coverage under the SEF 44, Teresa had to prove that she was not an occupant of her vehicle at the time she was injured.  The SEF 44 states:


In this Policy the word “occupant” means a person driving, being carried in or upon or entering or getting on to or alighting from an automobile.


No person shall be entitled to indemnity or payment under this Policy who is an occupant of any automobile which is being used without the consent of the owner thereof.

In addition to having to prove that she was not an occupant, to claim the SEF 44 coverage, Teresa also had to also prove that she was ‘struck” by a vehicle.

Economical denied SEF 44 coverage to Teresa as she was “an occupant” - she was either getting into the insured vehicle or was being “carried” by it.  In addition, if she was an occupant, she was not struck by a vehicle. She lost her grip on the vehicle and was injured when she fell to the pavement.

Teresa did not accept that denial. She filed an action for a declaration as to coverage and proceeded to trial based on an agreed statement of fact.

Justice Rosemary Nation (a former insurance defence counsel who I used to litigate with), held that the SEF 44 applied. Economical appealed. In a ruling released October 18, 2022, the Court of Appeal agreed with the trial judge.

Justice Nation held that being dragged by one’s vehicle does not mean that one is being carried by it:

In terms of the argument that the plaintiff was being carried upon the vehicle, I find that holding onto a vehicle when the driver swerves and accelerates, puts the plaintiff in an emergent situation. It would not on a plain reading of the policy, taking into account that this is a policy of insurance, interpret the words “being carried upon” to include being dragged beside a vehicle. “Being carried upon” would generally relate to someone being transported upon the car. There may be many circumstances where that may happen, where someone is upon the car, or sitting on the car, but this is not one of them.

The Court of Appeal held that this was a justifiable application of the facts to the policy wording.

Further, the trial judge held that somehow between the time that Teresa leaned into the open driver’s side window and her fall to the pavement, she was ‘struck’ by her vehicle, causing her injuries:

When I consider the word “struck”, looking at the facts, I find that a person who leans into the open window of a car, where the driver sets the car in motion, veering and accelerating is struck by that car in some fashion. To hold onto the car in those circumstances and being dragged for a few seconds in that interaction does not mean that the plaintiff was not struck.

The Court of Appeal agreed that this conclusion was supportable on the facts and was an interpretation that the word ‘struck’ could reasonably bear: “On this record it was open to the trial judge to find as a fact that the respondent was “struck” by her vehicle.

The popular press seldom reports on insurance coverage cases. However, this case was widely reported online and in newspapers. Popular sentiment seems to be that a wily insurance company was correctly forced to pay a person who was trying to save that same company from paying out for the theft of her vehicle. Optics are important and must be part of the equation when a denial is contemplated.

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