Coverage Pointers - Volume XXIV, No. 8

Volume XXIV, No. 8 (No. 629)
Friday, September 30, 2022
A Biweekly Electronic Newsletter

Hurwitz Fine P.C.
The Liberty Building
424 Main Street, Suite 1300
Buffalo, New York 14202
Phone: 716-849-8900
Fax: 716-855-0874

      Long Island Office:
575 Broadhollow Road
Melville, New York 11747
Phone: 631-465-0700
Fax: 631-465-0313

© Hurwitz Fine P.C. 2022
All rights reserved

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.


Dear Coverage Pointers Subscribers:

Do you have a situation? We do love situations.

Our heart goes out to our friends in Florida and in Canada (see Heather’s column) and in other places being stunned by the storms down south. Whatever issues we have up north are trivial as compared to the horrendous damage facing our friends in Florida.


Friday is the National Day for Truth and Reconciliation in Canada. 

The day honors the children who never returned home and survivors of residential schools, as well as their families and communities. Public commemoration of the tragic and painful history and ongoing impacts of residential schools is a vital component of the reconciliation process. Both the National Day for Truth and Reconciliation and Orange Shirt Day take place on September 30.


Orange Shirt Day is an Indigenous-led grassroots commemorative day intended to raise awareness of the individual, family .and community inter-generational impacts of residential schools, and to promote the concept of “Every Child Matters”.  The orange shirt is a symbol of the stripping away of culture, freedom and self-esteem experienced by Indigenous children over generations.


Around here, there is little question but that the summer is coming to an end. The days are shorter, the nights are colder, and the Canadians have ended COVID restrictions.  For those who crossed the border regularly, completing ArriveCan has been a daily chore, not a horrible one, but a chore, nonetheless.  Saturday is the last day when that app needs to be completed.  I have another 30 days at the beach, before taking the long trek (17 minutes, maybe 20 if there’s a bit of bridge back-up) to move back to my Buffalo home.  My commute to work is slashed, from 18 minutes, when I go from my Canadian home to my office, to nine minutes, when I travel from my Buffalo home to my office.  I am not sure what I will do with all this free time.



Crescent Dreams – The Land of the Blue Martinis

HF and CP continue to grow.

In this issue of Coverage Pointers, we are introducing a new column, called Gestwick’s Greatest.  Before our friend Jen Ehman left us to join Merchants Insurance, she wrote Jen’s Gems, a column that covered selected lower court coverage decisions in New York.  For those who don’t know the New York court system, our lower court of general jurisdiction is the Supreme Court, above which sits the Appellate Division of the State Supreme Court (divided in two four geographic judicial Departments).  The highest court is the Court of Appeals. So, the Supreme Court is the lower court and each of the 62 New York counties have the opportunity, when they are presented with motions or trials, to render plenary coverage decisions, many of which may end up being reviewed by one of the Departments of the Appellate Division.

Evan Gestwick will report on the greatest of those lower court decisions, to see whether we can see new or developing trends, or mistakes which we may predict will be reversed on appeal.

Who is Evan Gestwick, you might ask.  He is a UB Law Graduate, awaiting bar results and admission.  And there’s more.

A graduate of SUNY Buffalo with a Bachelor of Arts in Psychology, and later, a J.D., Evan is excited to begin the practice of law. Before starting as an associate attorney, pending admission, at Hurwitz Fine, Evan clerked with us for just over one year. During his time in law school, Evan volunteered as a student mentor for new law students and served as a student ambassador for the school of law; perhaps most notably, however, he not only took my insurance law course, but actually finds this stuff interesting. In his spare time, he enjoys cheering on the Buffalo Bills and is learning to brew his own beer. We are excited to have him on board.

Just as a PS – Evan Gestwick has been joined by fellow classmate Ryan O’Shea, who will joining with a column in an issue or two.  Evan and Ryan have been joined by another classmate, Richelle Kloch, who has joined our general litigation team along with Rob Caggiano, who returns to our firm after clerking here some time ago, working on the other side of the aisle, and then returning to the land of milk and honey.


Cases of Particular Interest:

  • In Steve’s column, the Second Department considers whether a request for lien protection received after a release was received, extends the 21-day period to pay a settlement or face judgment – it doesn’t.
  • In Mike’s column, two cases about the inadequate expert proof trying to defeat a motion for summary judgment on “serious injury”.
  • In Agnes’ column, an interesting Second Circuit decision on an unsuccessful lawsuit against a “parent” insurance company when its subsidiaries issues the policies.
  • In Brian’s column, another Florida court exposes attorney-client communications in a bad faith case, but requires an in camera inspection.
  • In Scott’s column, a lower court decision involving the use of “black box” evidence to establish lack of physical contact in a “hit and run” uninsured motorist arbitration.
  • In Kate’s column, a Vermont decision refusing to dismiss a COVID 19 Business Interruption lawsuit where the pleadings alleged “direct physical damages” to property.

And much more,


Expert Witness and Mediation Services:

By the way, if you are looking for an expert witness or a mediator to help resolve coverage or risk transfer issues, feel free to reach out.  For insurers battling with each other over coverage issues and justifiable concerned about developing precedent that may work against them in their next case, mediation is an excellent alternative.

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 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.

My good friend, Jean Lawler, a wonderful mediator from Los Angeles, and I, recently published a piece on how good mediators prepare for the process


Training, Training and More Training:
Schedule your in-house training for 2022.  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.


    Babe -- You ARE the Father – 100 Years Ago:

    The Gazette
    Cedar Rapids, Iowa
    30 Sep 1922


    The secret is out, Babe Ruth is the father of a 16-month-old daughter, Dorothy, but kept it a secret. Mrs. Ruth said that their reason for doing so was that the child weighed only 2 ¼ pounds at birth and had been sickly.

    Editor’s note: Dorothy was born June 7, 1921, in New York City at St. Vincent's Hospital to Juanita Jennings, and was adopted by Babe and Helen Woodford. It is documented that Dorothy was raised to believe that Helen was her biological mother. It is speculated that Helen did not know that Dorothy was the result of an extramarital affair between Babe and his girlfriend Jennings. It is possible that when Babe Ruth learned of his mistress' pregnancy, he convinced Helen, unaware that Babe was the father, to adopt the baby girl. Babe Ruth also somehow convinced Dorothy's biological mother to allow him to adopt their daughter, so that she could be raised with him and (a possibly unsuspecting) Helen.

    Helen and Babe Ruth separated sometime between 1924 and 1926. Babe and Helen Ruth did not divorce because of their religious beliefs. Dorothy lived with her adoptive mother Helen after the separation. In January 1929, when she was 7 years old, her mother died in a house fire. After Helen's death, Dorothy lived with her father and Claire Merritt Ruth, whom he married in April 1929. She had one stepsister as Babe had adopted Claire's daughter Julia.

    Dorothy learned at the age of 59 in 1980 that Juanita Jennings Ellias was her biological mother. Dorothy had known Juanita growing up, but only as a friend of her father. She referred to Jennings as Aunt Nita.


Peiper on Property and Potpourri:

More troubling precedent out of the Second Department.  Please take a moment to review the Levine case reviewed in this week’s column.  If taken literally, the Court appears to be saying that once a general release is tendered, irrespective of outstanding lien issues, the settling defendant is on the proverbial “clock” to pay.  Under the CPLR, once settlement papers are tendered payment must be issued within 21 days.  That’s not a lot of time to work out issues related to liens and other encumbrances.  Particularly, where the plaintiff’s counsel has no obligation to assist.

The message here is pretty clear.  If you have specific language you want in the release, or need information confirmed related to liens, you need to confirm those requirements, in writing, as part of the overall settlement agreement. 

Or, to take a page from the claims handler’s best practices, “if it ain’t in writing, it didn’t happen.” 

That’s it for this week. See you in two more.

Steven E. Peiper

[email protected]


Final Destination – 100 Years Ago:

The Buffalo Commercial
Buffalo, New York
30 Sep 1922

Another Car
Goes To Auto

          Deputy sheriffs this morning found an automobile hanging over the cliff on the lake shore at Wanakah.

          Investigators developed that it belongs to Joseph Marino, 64 Front Avenue.

          It was stolen yesterday. The point where the car was found is known as the burying ground of stolen automobiles. 


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

Dear Readers,

In this issue, we welcome more coverage associates to the team! We are thrilled to welcome Evan Gestwick, who previously wrote for this column and now has his own below. We are also very excited to announce and welcome Ryan O’Shea to the team. Here’s a missive directly from him. He wrote this week’s column (see attached) for the Wide World of Coverage but tune in soon for his very own beat!

Hello Everyone, my name is Ryan O’Shea, and I hail from the distant city of Rochester, New York. I am a recent graduate of UB Law and look forward to providing some interesting cases for your reading pleasure. This issue’s case involves another tenuous complaint focused on physical loss associated to COVID-19, and an attempt to hold an insurer for its subsidiaries' actions.

That’s all for now. Welcome to Ryan and welcome back to Evan! Check back again next time for the very latest in Circuit Court coverage decisions.

Until then,

Agnes A. Wilewicz

[email protected]


Suit for Safety – 100 Years Ago:

The Buffalo Commercial
Buffalo, New York
30 Sep 1922


By the Associated Press

          WASHINGTON, Sept. 30.—Improvement in medical X-ray outfits to the extent that all danger of electrical shocks and burns has been eliminated, was described to the American Roentgen Ray Society today by Dr. W. D. Coolidge of the General Electric company’s research laboratory at Schenectady, N. Y. At the same time, he said, the outfits have been rendered so compact that efficient models but little larger than a camera may now be purchased.

        Dr. Coolidge described the two new types of self-contained oil-immersed X-ray outfits for use in the doctor’s office.

        The specially designed tube in these types is completely enclosed in a metal box, filled with oil which is “grounded” so that the whole high tension system is safeguarded for both doctor and patient. The rays, passing through an opening in the box, are focused by a rubber cone which can be placed against the skin if desired. Auxiliary apparatus formerly required in X-ray outfits is done away with. The X-ray outfit is mounted on a stand and the only other device used is a small control switch, a transformer for adapting household electric current to the machine being included in each outfit.


Barnas on Bad Faith:

Hello again:

I hope that all of our friends and subscribers down in Florida are staying safe as Hurricane Ian makes landfall.  The photos and videos of the destruction caused by the storm are frightening.  I have a bad faith discovery case from the District Court of Appeal of Florida in my column this week.  The court found that the trial court erred by ordering disclosure of communications between adjusters and counsel working on the potential bad faith claim that took place before the underlying verdict without first conducting an in-camera review.

Brian D. Barnas

[email protected]


The Rise or the Fall of Alcohol? – 100 Years Ago:

Dunkirk Evening Observer
Dunkirk, New York
30 Sep 1922


New York, Sept. 30.—Governor Nathan Miller of New York, is opposed to prohibition, moving picture censorship, and some other blue laws, New Yorkers read with surprise today.

Miller made a speech at a state motion picture commission dinner last night in which he declared himself against prohibition, but made it clear he intended to enforce the law. He denied that search and seizure by police was necessary or legal.


Kyle's Construction Column:

Dear Readers,

We bid summer a fond farewell and welcome cool temperatures and quite a bit of rain here in Buffalo. Hopefully there is at least a month or so left of good golfing weather . . . fingers crossed. On the bright side, football season is in full swing. Tough loss this week for our Buffalo Bills, but I remain optimistic about a great season and hope to be able to attend a game soon!

This week’s case involves a coverage dispute arising out of a water loss at a residential complex. The court examines the application of policy exclusions for defective design and construction, as well as the efficient proximate cause rule.

Until next time..     

Kyle A. Ruffner

[email protected]


Gold Digging for Inheritance – 100 Years Ago:

Dunkirk Evening Observer
Dunkirk, New York
30 Sep 1922

New York Girl Kept Out of Fortune by
Father’s Queer Will—Got

          New York.—Miss Mary Miller, who is just twenty-one, must get married if she wants to get more money out of her share in a $426,000 estate left by her father, Julius Miller, manufacturer, who died March 31, 1918.


        That was disclosed when the executors filed an accounting in response to an order obtained in the girl’s behalf from Surrogate Foley. Miss Miller complained she is greatly in need of funds, and in the three years has only received $3,000.


        The executors say Miss Miller got proceeds of a $3,000 life insurance policy after her father’s death. She is not eligible for further payments, they assert, until she is twenty-five, when she is to receive her entire share as one of the principal beneficiaries, or unless she marries. If she married before she is twenty-five, the executors are directed to pay her $7,000 as a wedding present. The accounting showed the present value of the estate is $426,254.


Fleming’s Finest:

Hi Coverage Pointers subscribers:

With the radical shift in the weather, there is no mistaking the start of Autumn. Even though the leaves change every year, it’s still nice to admire them while they last and to step on crunchy leaves.

This week’s case from the Vermont Supreme Court considered how to interpret “direct physical loss or damage to property” in the context of the COVID-19 pandemic. Although the majority approach (as you may remember from Coverage Pointers!) is that the presence of COVID-19 is not direct physical loss or damage to property, the Vermont Supreme Court concluded that the complaint in this case alleged sufficient facts to survive judgment on the pleadings. It’s a surprising outcome, but the court did not definitively state that the presence of COVID-19 constitutes direct physical loss or damage to property.

Catch you later,

Katherine A. Fleming

[email protected]


Reward for Return!  – 100 Years Ago:

The Vermont Journal
Windsor, Vermont
30 Sep 1922


          On the turnpike road some where between Royalton and John Downer, Esq’s. Tavern, in Sharon, a light coloured GREATCOAT with green baize lining. Whoever may have found said coat and will give information so that the subscriber can get it, shall be rewarded reasonably; as the cold weather is coming on soon, and he is afraid he shall not collect enough by riding post to buy another.


Ryan’s Capital Roundup:

Gone fishing.

Ryan P. Maxwell

[email protected]


Technology Advancements – 100 Years Ago:

Yonkers Statesman
Yonkers, New York
30 Sep 1922

Watch World’s Series!
Statesman Will Bring
Polo Grounds to City

Every Play in Each Game of the Great Contest Will
Be Depicted on Magnetic Wonder Playing Board
as It Is Flashed by Direct A. P. Wire

          The Yonkers Statesman will give returns of the World’s Series games on a Standard Magnetic Wonder Player Board which will be erected on the front of The Statesman Building.

          The Standard Player Board is recognized as the best, is 9 feet high and 11 feet wide, shows the game actually played on a diamond, with every day plainly given and the runs, hits, put outs, assists and errors kept as the game progresses.

          It is the same kind of a board as was used by the New York Times two years ago, similar to that which played the game for thousands at Madison Square Garden last year and will be used by almost 100 newspapers in the country this year.

          But The Statesman’s World Series service ill be even more complete than that. An extra edition will be on the streets within a few minutes after the conclusion of the games. The regular editions will carry up-to-the-minute news of the games.


Dishing Out Serious Injury Threshold:

Dear Readers,

As fall is nearly upon us, I hope everyone is able to get out and about and enjoy the nice fall weather. I was luckily able to get away for a short weekend trip and go hiking in the Hudson Valley. Hopefully I can get up there a few more times before it gets too cold out.

I was able to locate two cases to talk about this week. The first is from the First Department about how plaintiff’s expert was unable to opine as to the cause of plaintiff’s injury, thereby failing to raise an issue of fact and precluding summary judgment. The second is a Second Department case that pertains to uncertified medical reports being used in motions for summary judgment in order to preclude plaintiff’s motion for summary judgment.


Michael J. Dischley

[email protected]  


Cars, Cars, and More Cars – 100 Years Ago:

The Buffalo Enquirer
Buffalo, New York
30 Sep 1922


          HENRY FORD, they say, is arranging to produce 6,000 cars daily next year.

          Counting 300 working days a year, that means 1,800,000 more cars scurrying about the country.

          Other manufacturers as a rule, no doubt, are preparing to increase production. “Analysis of information secured through governmental sources discloses that the automobile industry is the largest manufacturing enterprise in the world.” The Automobile Trade Journal relates that “the number of automobiles and trucks that will be manufactured this year will be slightly in excess of 2,000,000.

          Every new automobile diminishes the already low chance of getting safely across the street. Bring on those fool-proof airplanes!


Lee’s Connecticut Chronicles:

Dear Nutmeg Newsies:

It continues to be a slow period for insurance decisions from the Connecticut courts. We’re hoping to have something interesting to report soon. For yours truly, it’s not been nearly as slow. We moved from our summer farewell right into the start of fall, the return to school, pushy judges, and the Jewish High Holidays. We hosted a Baker’s Dozen for Rosh Hashana. It’s always nice to be surrounded by friends and family during this time of year—and cook for days a meal that lasts less than an hour. A labor of love. 

A Happy and Healthy New Year to all. L’shanah tova!

Lee S. Siegel

[email protected]


What Happened to Freedom of Speech? – 100 Years Ago:

Democrat and Chronicle
Rochester, New York
30 Sep 1922


Woman Who Replied to Advertisement
Says Man Wrote Insulting Answer

          William King, 46 years old, who rooms at No. 83 Chestnut Street, was arrested last night on complaint of a woman who answered his advertisement for a housekeeper. The woman, whose name is withheld by police, said she received an insulting letter from King in answer to her application.

          King, who is a chewing gum salesman from California, was arrested by Detective Collins and Acting Detectives Ashton and Kluch. Acting Detective Ashton said that King admitted writing the letter to the woman, which now is in the hands of the police.


Rauh’s Ramblings:

Hello Subscribers!

Following a tough loss for the Bills last week, I am looking forward to what I hope to be a big win on Sunday against the Ravens!  I think this is going to be a really exciting season for Bills’ fans and I am looking forward to seeing how the season progresses.

This week, I have a case from the Second Circuit regarding the interpretation of Insurance Law 3203(a)(2) and its applicability to life insurance premium payments.  Interestingly, there was no controlling case law to support either party’s arguments on appeal, and the question on appeal was certified to the New York Court of Appeals for interpretation.  I will follow along with this case and report back on the Court of Appeals findings.  However, each party did set forth interesting arguments, so I recommend reading my case summary to learn more about this case.

Until next time!    

Patricia A. Rauh

[email protected]


Unwilling to Exit the Premises – 100 Years Ago:

The Brooklyn Daily Eagle
Brooklyn, New York
30 Sep 1922


Writes Friend He “Will Discharge
His Holy Duties to the

          Constantinople, Sept. 30 (by the Associated Press)—In a letter to an intimate friend, the Sultan, reports of whose abdication have been in circulation, declares he will not abdicate.

          “I shall continue to discharge my holy duties until the end,” he wrote. “When the Nationalists enter Constantinople, I shall have something pertinent to say to them. I have done what I believed was to the interests of my country and my people. I have made mistakes, but they were human. The Nationalists admit I have been kept a prisoner in Constantinople. Therefore, how can I be responsible for the adversity of my people?”

          The palace officials say the Sultan is firmly resolved to retain his throne. However, should he be forced to abdicate, he will be permitted to remain on Turkish soil, it is understood.


Storm’s SIU:

Hi Friends--

Sorry, only two case reviews this edition.  Business is BOOMING, it’s a super busy week!

  • Insurer’s motion for summary judgment denied where SWAT team damaged home to extricate barricaded insured as questions of fact exist whether the loss was “sudden” and “accidental” and whether the criminal acts exclusion applies.  Bad faith claim dismissed as insurer’s use of coverage counsel underscores the reasonability of the investigation, even if the result of its analysis is eventually determined to be flawed.

  • Temporarily stay of uninsured motorist arbitration pending a framed-issue hearing whether an accident and fraud occurred where black box evidence indicated no physical contact with another vehicle and respondent was traveling at 103 MPH.  

See also Dan’s section:  Misrepresentations by Insured in Policy Application Can Void No Fault Coverage if Proper Proof is Submitted

But it’s a great time to be a baseball fan with Albert Pujols joining the 700-homer club and, as of writing this, Judge has tied Maris for the all-time AL homer record.  The Dodgers are at 106 wins.  It’s going to be a fun playoff season.  Let’s go out for a “legal adult beverage” (like a friend of mine says) and watch some games. 

Never let the fear of striking out keep you from playing the game”.  ~ Babe Ruth

I hope you have a great two weeks until the next edition.

Scott D. Storm

[email protected]


Sneaky Schemes – 100 Years Ago:

The Brooklyn Daily Eagle
Brooklyn, New York
30 Sep 1922

Female Ponzi and Husband
Jailed at Pomeroy, Ohio;
Borrowings Exceed $300,000

          Pomeroy, Ohio, Sept. 30—Mrs. Susan Kraus and her husband, George Kraus, a former miner, were in the county jail here today on charges of embezzlement, and with their arrest, officials say, will be uncovered the fabrication of a financial scheme that will rival that of Ponzi, the Boston “wizard,” who promised big returns for the use of money.

          The Kraus couple were arrested on an affidavit signed by A. W. Lee, acting as an agent for Bertha Seyfried, who listed a loss of $4,000.

          Holding out a return of 10 percent, Mrs. Kraus, it is charged, has borrowed in excess of $300,000 from Pomeroy persons, giving them promissory notes, and paying interest by further notes. According to Lee, Miss Seyfried, and a sister, loaned the woman $39,000.


Gestwick’s Greatest:

“I’m baaaack!” You may remember me from when I wrote for Agnes’ Wilewicz Wide World of Coverage column earlier this year. I temporarily took some time away from the firm to study for that pesky bar exam and am delighted to have returned to Hurwitz Fine’s coverage team as an associate attorney (pending admission). I’m back, and this time, with my very own column! Welcome to the inaugural edition of Gestwick’s Greatest.

This week, I bring to you an important lesson about the applicable accrual date in policies that specify the amount of time in which an insured may bring suit against their carrier for a breach of the policy. In this case, the plaintiff was an additional insured under a builder’s risk policy that was issued by the defendant. The policy specified that an insured with standing to sue the carrier must do so “within two years after the date on which the loss or damage commenced.” The plaintiff missed this deadline by several months and argued that because the policy did not say “physical loss,” the provision was ambiguous and therefore ought to be construed in their favor. The New York State Supreme Court, Bronx County, held otherwise. The Court referenced other New York case law, which holds that the use of the word “inception,” in lieu of the word “commenced” as is used here, refers to the occurrence of any event that would give rise to a potential claim under the policy. The important takeaway from this case is that physical loss need not occur in order for the policy-imposed limitations period to begin to run.

See you in two weeks.

Evan D. Gestwick – Admission Pending

[email protected]


Nominees Announcement – 100 Years Ago:

New York Herald
New York, New York
30 Sep 1922

Democratic Nominees
of State Convention

Special Dispatch to THE NEW YORK HERALD.

SYRACUSE, Sept. 29.—These are the nominees of the Democratic State Convention:





  • ATTORNEY-GENERAL—CARL SHERMAN, Assistant United States Attorney, of Buffalo.

  • SECRETARY OF STATE—JAMES A. HAMILTON of The Bronx, Commissioner of Correction.



Editor’s note:  The entire Democratic slate was elected in November 1922.  Only Al Smith was reelected in 1924, the rest of the slate defeated in the general election.  Attorney General Carl Sherman was a UB Law Graduate, having received his diploma in 1910 at age 20, then elected AG at the tender age of 32.  There is hope for me yet.


North of the Border:

As I write this, I am flying to Toronto to attend an in-person meeting of the Canadian Defence Lawyers (CDL) Board of Directors, followed by the first ever weekend meeting of the Women’s Caucus to be held in Niagara- on-the-Lake. I am very much looking forward to the next three days.

However, tomorrow is the National Day for Truth and Reconciliation – a federal holiday.  It is a day to Honour the Indian, Inuit and Metis survivors of the Canadian Residential School system and to reflect upon the estimated 6,000 children who died in residential schools due to abuse – inadequate medical care and diet in addition to physical and sexual abuse.

The Law Society of Alberta mandated that all lawyers in the province must take an online course on Indigenous history and perspective. I completed the course this week. Sobering. Thought provoking. Tomorrow, as in past years, I will wear orange to honour one such survivor, Phyllis, and to say, “Every Child Matters”.

Heather A. Sanderson

[email protected]


Camp Collects Compensation – 100 Years Ago:

Elmira, New York
30 Sep 1922

GIVEN $8,000

Jury Returns Verdict in
Favor of Plaintiff in Action
Against Pennsylvania

          Mrs. Anna Camp was awarded a verdict of $8,000 by a jury in Supreme Court late Friday afternoon against the Pennsylvania Railroad Company. Mrs. Camp sought damages for the death of her husband, Willis Camp, killed in 1917 at Canandaigua while in the employ of the defendant company. Mrs. Camp was represented by Attorney Mortimer L. Sullivan while the defendant was represented by Attorney Alexander S. Diven.

          This case was tried in April 1921, in this city before Justice R. L. Davis, but an appeal was taken by the defendants and the case was sent back for another trial. The verdict for the plaintiff when tried before was $5,000.


Headlines from this week’s issue, attached:



Dan D. Kohane

[email protected]

  • Misrepresentations by Insured in Policy Application Can Void No Fault Coverage if Proper Proof is Submitted



Steven E. Peiper
[email protected]

  • Requests for Information After Settlement Cannot Stop 21 Day Time Limit to Pay if General Release is Tendered

  • Unsubstantiated Claims of Law Office Failure are Insufficient to Avoid Default Judgment



Michael J. Dischley

[email protected]

  • Plaintiff’s Expert Unable to Opine as to Cause of Accident Thereby Failing to Raise a Triable Issue of Fact and Precluding Summary Judgment

  • Plaintiff’s Expert Findings Insufficient to Raise Triable Issue of Fact



Agnes A. Wilewicz
[email protected]

  • Insurer Cannot Be Held Responsible For Policies Issued By Its Subsidiaries Where It Is Not A Signatory Nor Authorized Its Agents; and COVID-19 Is Still Not Considered Physical Damage in New York



Brian D. Barnas
[email protected]

  • Trial Court Erred in Ordering Production of Communications Between Adjusters and Counsel on Bad Faith Claim Without In-Camera Inspection


Lee S. Siegel
[email protected]

  • Nothing to report in this edition of CP.



Kyle A. Ruffner
[email protected]

  • Exclusion for Inadequate or Defective Construction and Maintenance Precludes Coverage for Water Loss



Ryan P. Maxwell

[email protected]

  • Nothing this week.



Patricia A. Rauh
[email protected]

  • Whether a Planned Payment into an Interest-Bearing Policy Account Constitutes a “Premium Actually Paid for any Period” under the Refund Provision of Insurance Law 3203(a)(2) is a Question for New York Court of Appeals to Decide as there is no Controlling Precedent



Scott D. Storm
[email protected]

  • Insurer’s Motion for Summary Judgment Denied Where SWAT Team Damaged Home to Extricate Barricaded Insured as Questions of Fact Exist Whether the Loss was “Sudden” and “Accidental” and Whether the Criminal Acts Exclusion Applies.  Bad Faith Claim Dismissed as Insurer’s Use of Coverage Counsel Underscores the Reasonability of the Investigation, even if the Result of its Analysis is Eventually Determined to be Flawed

  • Temporarily Stay of Uninsured Motorist Arbitration Pending a Framed-Issue Hearing Whether an Accident and Fraud Occurred Where Black Box Evidence Indicated No Physical Contact with Another Vehicle and Respondent was Traveling at 103 MPH



Katherine A. Fleming
[email protected]

  • Complaint Sufficiently Alleged Direct Physical Loss Or Damage Arising Out Of The Presence Of COVID-19 To Survive Judgment On The Pleadings



Evan D. Gestwick – Admission Pending
[email protected]

  • The Policy-Imposed Time Limit in Which to Bring a Suit Against the Carrier Runs at the “Inception” or “Commencement” of the Grounds to Make the Claim



Heather A. Sanderson
[email protected]

  • Post Tropical Cyclone Fiona Slammed Atlantic Canada


Best wishes from your friends at Hurwitz Fine and Happy New Year.


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

[email protected]

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
Ryan P. Maxwell
Patricia A. Rauh
Diane F. Bosse
Joel R. Appelbaum
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]

09/27/22       Liberty Mutual Insurance Company v. Valera
Appellate Division, First Department
Misrepresentations by Insured in Policy Application Can Void No Fault Coverage if Proper Proof is Submitted

In June 2019, the claimant was injured in a collision involving a vehicle that she insured under an automobile insurance policy issued by Liberty. The policy included an endorsement entitling the claimant to receive payment for accident-related medical expenses and entitling her treating medical providers to collect her assigned no-fault benefits.

In January 2020, the Liberty filed this action for a declaration of no-coverage and an injunction barring medical providers from seeking any no-fault reimbursement under the claimant's automobile insurance policy. It was claimed that the claimant had intentionally and materially misrepresented her home address in procuring the policy, as the proper policy address was not the Wappingers Falls address she had stated, but rather, an address in the Bronx.

The insurers submitted undisputed evidence that the claimant misrepresented her address based on her testimony at the Examination Under Oath (EUO).

However, the insurer failed to establish, as a matter of law, that the alleged misrepresentation as to the correct address was a material misrepresentation. The affidavit of the insurers' underwriter is conclusory and not supported by relevant documentary evidence such as underwriting manuals, rules, or bulletins Accordingly, the motion for summary judgment was denied without prejudice to give the insurer the opportunity to present that proof.



Steven E. Peiper
[email protected]

09/21/22       Levine v. American Multi-Cinema, Inc.
Appellate Division, Second Department
Requests for Information After Settlement Cannot Stop 21 Day Time Limit to Pay if General Release is Tendered

This matter was presumptively settled in May of 2019 for $25,000.  The settlement was reached in the presence of the law clerk for the justice presiding over the case.  Approximately two weeks later, plaintiff’s counsel forwarded an executed general release and stipulation of discontinuance.  Three days after that, counsel to AMC rejected the general release and sent back in return a draft release favored by AMC which, inter alia, required plaintiff to defend and indemnify AMC from and against any liens. 

Approximately one month later, plaintiff’s counsel retendered the same general release via mail with reference to AMC’s obligation to pay with 21 days under CPLR § 5003-a.  AMC’s counsel then advised that regardless of the general release, AMC would not issue payment until all liens had been satisfied and letter advising of the same was provided.  AMC eventually paid a small lien of $1,716.18.  In the meantime, plaintiff moved for a judgment with interest.  The motion was granted awarding a total of $26,954.75 to plaintiff. 

AMC, in turn, tendered payment for $23,283.82 which amounted to the difference between the $25,000 settlement and the amount paid to satisfy the lien.  When plaintiff rejected the tender, AMC moved to vacate the judgment previously awarded against it.  The trial court granted AMC’s motion to vacate the judgment, and compelled plaintiff to accept the settlement check less amounts paid on asserted liens.

In a mechanical application of Section 5003-a, the Appellate Division reversed.  The Court noted that the plain language of the statute only requires the tender of a release and stipulation of discontinuance.  That was done here, and as a result the 21-day time period to issue payment had been started.  The court went on to say that there is nothing in the statute that obligates plaintiff to provide Medicare lien information or provide a Medicare payoff letter, as a condition precedent to issuing the release.

Peiper’s Point – Lesson be learned.  If your carrier has specific language, rules or protocol regarding settlements, make sure you clearly relay them, in writing, prior to agreement on the settlement number.  Once the general release comes in, absent a reason to reject as outside the terms of the settlement, the clock starts ticking.    


09/21/22       Hingorani v. Venus Enters. 11 Corp.
Appellate Division, Second Department
Unsubstantiated Claims of Law Office Failure are Insufficient to Avoid Default Judgment

Co-Defendant Hingorani engaged in a host of activities that allegedly amounted to fraudulent misrepresentation, unjust enrichment and defamation.  His actions resulted in a lawsuit being filed against him.  When the defendants failed to timely appear, the plaintiff immediately moved for a default judgment.

Two weeks later, defendant cross-moved seeking an Order compelling plaintiff to accept the late Answer. Defendant’s cross-motion was denied, and the default granted where the trial court found the excuse of law office failure was “unsubstantiated, conclusory and inadequately explained.  More problematic, the Court also noted that the claims of law office failure were part of a pattern of “repeated neglect,” presumably, by the defendants. 

On appeal, the Appellate Division affirmed.  Citing the long-established fact that trial courts have discretion on accepting law office failure as an acceptable reason, the court also noted that a “pattern of willful default and neglect should not be excused.”  Further, law office failure requires a “detailed and credible explanation.”  Where none was offered here, it made no difference as to whether defendant had a potentially meritorious defense.



Michael J. Dischley
[email protected]

09/27/22       Daniel Lyons v. New York City Transit Authority, et al.
Appellate Division, First Department
Plaintiff’s Expert Unable to Opine as to Cause of Accident Thereby Failing to Raise a Triable Issue of Fact and Precluding Summary Judgment

In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, New York County (Suzanne J. Adams, J.), dated February 9, 2021. The order granted defendants' motion for summary judgment dismissing plaintiff's claims that he sustained a serious injury to his cervical spine, lumbar spine, or thoracic spine within the meaning of Insurance Law § 5102(d), unanimously affirmed, without costs.

The Appellate Court found that defendants made prima facie showing that plaintiff's claimed injuries to his cervical spine and lumbar spine were not causally related to the subject motor vehicle accident by submitting an affirmed report of their radiologist, who opined that the MRIs of those body parts showed degenerative conditions and no evidence of trauma. Defendants also submitted evidence that plaintiff had previously injured his back in a prior motor vehicle accident, an MRI report by plaintiff's radiologist that found degenerative conditions in his cervical spine, and X ray reports finding scoliosis in his thoracic and lumbar spine. In addition, defendants satisfied their prima facie burden by submitting an affirmed report of their neurologist, who found that plaintiff had normal range of motion in his cervical, thoracic, and lumbar spine, and was capable of performing all his daily activities.

In opposition, plaintiff submitted only a report of an orthopedic expert retained by defendants who found restricted range of motion in plaintiff's cervical, thoracic, and lumbar spine, but expressed no opinion on the cause of plaintiff's spinal conditions, except to note that plaintiff made suboptimal effort on testing and did not inform him of any prior accidents or injuries.

Based on the foregoing, since plaintiff offered no medical evidence to address defendants' prima facie showing that his claimed conditions were degenerative or preexisting in nature, the Appellate Court found that plaintiff failed to raise an issue of fact as to whether he sustained a serious injury causally related to the subject accident.

09/14/22       Mark Kirby v. Jacquelyne A. Davis, et al
Appellate Division, Second Department
Plaintiff’s Expert Findings Insufficient to Raise Triable Issue of Fact

In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Queens County (Darrell L. Gavrin, J.), dated September 27, 2019. The order, as far as appealed from, granted those branches of the plaintiff's motion which were for summary judgment on the issues of liability and serious injury. The order, as far as cross-appealed from, denied that branch of the plaintiff's motion which was for summary judgment dismissing the defendants' first affirmative defense, alleging comparative negligence.

In January 2018, the plaintiff commenced this action against the defendants to recover damages for personal injuries he alleged he sustained in June 2017 when a bicycle that he was riding on Jewel Avenue near the intersection of Kissena Boulevard in Queens was struck by a motor vehicle owned by the defendant Jacquelyne A. Davis and operated by the defendant Joseph Davis (hereinafter the defendant driver).

After joinder of issue, the plaintiff moved for summary judgment on the issues of liability and serious injury, and for summary judgment dismissing the defendants' first affirmative defense, alleging comparative negligence. In an order entered September 27, 2019, the Supreme Court granted those branches of the plaintiff's motion which were for summary judgment on the issues of liability and serious injury but denied that branch of the motion which was for summary judgment dismissing the defendants' first affirmative defense. The defendants appeal from so much of the order as granted those branches of the plaintiff's motion which were for summary judgment on the issues of liability and serious injury, and the plaintiff cross-appeals from so much of the same order as denied that branch of his motion which was for summary judgment dismissing the defendants' first affirmative defense.

The Appellate Court found that the Supreme Court properly granted that branch of the plaintiff's motion which was for summary judgment on the issue of liability. The plaintiff established, prima facie, that the defendant driver breached a duty owed to the plaintiff and that the defendant driver's negligence was a proximate cause of the plaintiff's alleged injuries. In support of his motion, the plaintiff submitted, inter alia, transcripts of the deposition testimony of the plaintiff and of the defendant driver, which demonstrated that the defendant driver turned right without yielding the right-of-way to the plaintiff when the turn could not be made with reasonable safety. In opposition, the defendants failed to raise a triable issue of fact.

The Appellate Court found that the Supreme Court also properly denied that branch of the plaintiff's motion which was for summary judgment dismissing the defendants' first affirmative defense. The parties' divergent deposition testimony as to how the accident happened, transcripts of which were submitted in support of the plaintiff's motion, failed to eliminate all triable issues of fact as to whether the plaintiff was comparatively negligent in the happening of the accident. Although the issue of a plaintiff's comparative negligence may be decided in the context of a plaintiff's motion for summary judgment on the issue of liability when a plaintiff also seeks dismissal of a defendant's affirmative defense alleging comparative negligence, here, the plaintiff failed to meet his prima facie burden on this issue. Thus, we need not consider the sufficiency of the papers submitted in opposition in this regard.

Finally, The Appellate Court found that the Supreme Court should have denied that branch of the plaintiff's motion which was for summary judgment on the issue of serious injury. The plaintiff submitted, inter alia, the affirmed medical report of an orthopedic surgeon who examined the plaintiff in October 2018 and again in May 2019 and reviewed the MRI films of the plaintiff's left knee that were taken in June 2017. In his affirmed medical report, the surgeon opined that, based on, inter alia, his review of those left knee MRI films, the plaintiff sustained a fracture in the left knee because of the accident. This report was sufficient to meet the plaintiff's prima facie burden of showing that he sustained a serious injury within the meaning of Insurance Law § 5102(d) as a result of the accident, inasmuch as he sustained a fracture to his left knee.

In opposition, the defendants relied upon uncertified emergency room hospital records regarding the plaintiff's treatment at New York Presbyterian Hospital on the date of the accident. Although the hospital records were uncertified, contrary to the plaintiff's assertions, they were admissible in opposition to this branch of the plaintiff's motion, since they were from the plaintiff's treating medical care providers and were submitted to demonstrate a lack of serious injury, to wit, refuting the plaintiff's claim of a fracture to his left knee. Contrary to the Supreme Court's determination, those hospital records raised a triable issue of fact as to whether the plaintiff sustained a fracture to his knee on the day of the accident. The plaintiff's hospital records contained an x-ray report of his left knee on the day of the accident that was noted to be "unremarkable". Accordingly, the Appellate Court found that the Supreme Court should have denied that branch of the plaintiff's motion which was for summary judgment on the issue of serious injury.



Agnes A. Wilewicz
[email protected]

09/15/22       Buffalo Xerographix v. Hartford Fire Ins.
United States Court of Appeals, Second Circuit
Insurer Cannot Be Held Responsible for Policies Issued by Its Subsidiaries Where It Is Not a Signatory nor Authorized Its Agents; and COVID-19 Is Still Not Considered Physical Damage in New York

Plaintiffs in a putative class action suit entered into policies with The Hartford’s numerous subsidiaries. The policies issued were all-risk commercial property policies that provide coverage for physical loss unless that loss is excluded or limited. The subsidiary issued policies contained the Hartford’s logo, its officer’s signatures and references said officers throughout said policies. Enter the COVID-19 pandemic.

Plaintiffs were directed to cease operations in Spring of 2020. The Plaintiffs’ business stoppage was caused by the COVID-19 pandemic. Plaintiffs then sought to recover their losses under the subsidiary issued policies. The subsidiaries disclaimed coverage. Plaintiffs then sued in the Western District of New York bringing claims for breach of contract and bad faith under N.Y. Gen. Bus. Law § 349. The heart of the breach of contract claim is whether presence of COVID-19 created physical loss or damage. Plaintiffs alleged the Hartford was a signatory to the subsidiary policies due the presence of its logo, officer signatures, and references made to it, or under a theory of agency. The District Court construed the bad faith claim to be based on deceptive marketing.

After being unsuccessful in the District Court, Plaintiffs appealed to the Second Circuit. The Court did not bite on the Plaintiffs’ argument. Instead, it affirmed the finding that the use of the parent company’s logo is not enough to make it a signatory to a contract issued by a subsidiary, nor is an officer’s signature or reference to the parent company. Further rejecting Plaintiffs’ agency theory, the Court determined the policies clearly indicated the contract was between the insured and the subsidiary, and that each subsidiary maintained its own risk pool independent from the Hartford and other subsidiaries. After affirming the dismissal for the claims against the Hartford, the Second Circuit reiterated its previous findings to affirm the dismissal of the action against the subsidiaries. The presence of COVID-19 on a surface does not cause property to be physically lost or damaged. Without physical loss or damage, there can be no coverage. In sum, a logo does not make an Insurer liable for a subsidiary, and COVID-19 on a surface still does not create physical loss or damage.



Brian D. Barnas
[email protected]

09/16/22       Allstate Insurance Company v. Ray
District Court of Appeal of Florida, Second District
Trial Court Erred in Ordering Production of Communications Between Adjusters and Counsel on Bad Faith Claim Without In-Camera Inspection

Ray, as personal representative of the Estate of Veilleux, brought a bad faith action against Allstate for failing to settle and to adequately defend a personal injury claim against the Estate.  Veilleux was at fault in a crash with Gerald Aloia in 2006.  Aloia and the Estate were unable to agree to the terms of a settlement within the policy limits. 

Allstate anticipated a potential bad faith claim, so it assigned two adjusters for the anticipated bad faith claim.  It also retained outside counsel and assigned in-house counsel to handle the claim.

The jury in the tort litigation returned a verdict in favor of Aloia of $44,932,206.  The Estate made a motion for a new trial or for remitter.  The trial allowed the Estate to select either to have a new trial or to accept an $18 million verdict.  Allstate chose to accept the $18 million verdict.  The Estate then sued Allstate for bad faith for failing to settle.

In the bad faith action, the Estate sought documents that included communications between the bad faith claim adjusters and counsel, all which Allstate contended pertain to the merits and defense of the bad faith action.  The trial court rejected Allstate’s claims of work product and attorney-client privilege as to items that existed prior to the conclusion of the underlying litigation, reasoning that such items must relate to the handling of the underlying claim.  The court ordered production of the remaining documents for in-camera inspection. 

Allstate acknowledged that work product materials relating to the underlying claim are discoverable in a first-party bad faith action but argued that the trial court's order departed from the essential requirements of law when it held that any documents predating the conclusion of the underlying litigation necessarily pertained to the underlying tort litigation.

When an insured party brings a bad faith claim against its insurer, the insurer may not discover those privileged communications that occurred between the insurer and its counsel during the underlying action.  However, cases may arise where an insurer has hired an attorney to both investigate the underlying claim and render legal advice.  Where a request implicates both the attorney-client privilege and the work product privilege the trial court should conduct an in-camera inspection to determine if the requested materials are in fact covered by the attorney-client privilege.  The court concluded that the trial court erred in ordering disclosure of the communications that predated the end of the underlying action without first conducting an in-camera inspection.

The court quashed the portion of the lower court’s order that required immediate production of all materials without an in-camera inspection.



Lee S. Siegel
[email protected]

Nothing to report in this edition of CP.



Kyle A. Ruffner
[email protected]

09/23/22       Corliss Condominium Owners Association v. National Surety Corporation and The American Insurance Company
United States District Court, W.D. Washington, at Seattle
Exclusion for Inadequate or Defective Construction and Maintenance Precludes Coverage for Water Loss

The Corliss Building in Seattle, Washington, is a three-story multi-family residential building. Between 2008 and 2013 National Surety and The American Insurance Company (TAIC) provided five all-risk property policies to Corliss. In 2019, Corliss tendered an insurance claim to the defendants seeking coverage for the cost of repairing water damage. Defendants retained an Engineering Service, which performed an investigation along with a consultant hired by Corliss.

The defendant’s engineers determined that construction related deficiencies and a lack of adequate maintenance were the primary cause of the water intrusion. The consultant hired by Corliss reported that the water damage was caused primarily by wind driven rain, combined with inadequate drainage and omitted or damaged sealant joint. Defendants denied Corliss’s insurance claim under the policies because the damage resulted from inadequate or defective construction and maintenance, which were excluded by the policies, leading to a sequence of events that resulted in water intrusion.

Corliss argued the defendants improperly denied its claim because the efficient proximate cause rule mandated coverage. When two or more perils combine in sequence to cause a loss and a covered peril is the predominant or efficient cause of the loss, the efficient proximate cause rule mandates coverage even if an excluded event appears in the chain of causation. However, the rule does not mandate coverage when an excluded peril sets in motion the casual chain of events. The parties agreed that the policies exclude loss or damage caused by faulty, inadequate, or defective design, construction or maintenance and agreed that weather events, such as wind-driven rain, are covered under the policies. The only dispute was whether inadequate or defective construction and maintenance initiated the sequence of events that resulted in the water damage.

The defendant’s engineer determined that the damage resulted from original construction deficiencies and improper maintenance. Similarly, the consultant for Corliss documented numerous deficiencies dating back to the original construction and, although he asserted that wind-driven damage was the primary cause of the water damage, he agreed that water could not penetrate a building unless a pathway is present due to an opening or construction defect. Therefore, the court determined that inadequate or defective construction and maintenance initiated the sequence of events that resulted in water damage.

Corliss further argued that even if the exclusion applied, the ensuing loss provision preserves coverage because weather conditions are a covered loss. However, ensuing loss provisions are exceptions to policy exclusions and cannot be interpreted to create coverage. The court cautioned that Corliss’s position had the potential to swallow the policy exclusions whole. Therefore, the court held that the ensuing loss provision does not preserve coverage. The court denied Corliss’s motion for summary judgment, concluding that the Defendants property denied Corliss’s claim for insurance coverage under the policies because excluded causes of loss initiated the sequence of events that resulted in the damage.



Ryan P. Maxwell
[email protected]

Nothing this week, but that should make for a riveting edition next time ‘round.



Patricia A. Rauh
[email protected]

09/26/22       Nitkewicz et al. v. Lincoln Life & Annuity Co. of NY
United States Court of Appeals, Second Circuit
Whether a Planned Payment into an Interest-Bearing Policy Account Constitutes a “Premium Actually Paid for any Period” under the Refund Provision of Insurance Law 3203(a)(2) is a Question for New York Court of Appeals to Decide as there is no Controlling Precedent

In 2011, defendant, Lincoln Life & Annuity Company of New York (“Lincoln Life”) issued a life insurance policy to the Joan C. Lupe Family Trust (the “Trust”) to insure the life of Joan C. Lupe (“Lupe”) for $1.5 million.  Lupe elected to receive universal life insurance.  Unlike term life insurance, where the policyholder pays a periodic premium that extends coverage for a specific amount of time, universal life insurance typically includes both regular insurance coverage and an interest-bearing account with cash value.  The policyholder pays premiums into the interest-bearing account (the “Policy Account”), and Lincoln Life takes money from it to pay for insurance coverage and other expenses.  The initial premium is due on the date the policy goes into effect, but the payment schedule is flexible thereafter.  According to the terms of the policy, premiums “may be paid at any time prior to the Insured’s Attained Age 121 and in any amount”, so long as the payments are sufficient to meet the monthly deductions, which keep the policy in force from month-to-month.

Meanwhile, the funds in the Policy Account accumulate interest and may be withdrawn by the policyholder.  Each month, Lincoln Life deducts from the Policy Account the cost of insurance plus any administrative charges and riders.  If there are insufficient funds on that date, the policy enters a grace period of 61 days to allow the policyholder time to deposit the minimum amount needed to continue coverage.  If sufficient payment is not made, the policy terminates at the end of the grace period.

To ensure there are always enough funds in the Policy Account, Lupe elected to commit to a payment schedule in advance through a feature knows as “Planned Premium.”  This feature is entirely optional and does not guarantee continued coverage.  By signing up for this feature, Lupe was able to indicate how much and when she intended to deposit money into her Policy Account, and Lincoln Life then sent her payment reminders at the appropriate intervals.  Lupe chose to pay an annual Planned Premium of $53,878, for which she received billing reminders at her residence.

About this case, there are two aspects of Lincoln Life’s insurance policy that are relevant to this appeal.  First, as part of her policy, Lupe executed a “Coverage Protection Guarantee Rider”, which is designed to prevent a policy from terminating when there is not enough money in the Policy Account to cover the monthly deduction.  Pursuant to this rider, Lincoln Life deducts from the Policy Account a “Coverage Protection Guarantee” monthly premium, which is deposited into accounts set aside for “Coverage Protection.”  So long as the funds in the Coverage Protection accounts equal or exceed the value of any debt, a policy will not enter the grace period even if there are not enough funds in the Policy Account.

Second, Lincoln Life offers policyholders the choice between two “death benefit options.”  Under Option I, which Lupe chose, the death benefit is “the Specified Amount on the date of death”, which in Lupe’s case was $1.5 million.  Under Option II, the death benefit is “the Specified Amount on the date of death plus the [value of the Policy Account] at the beginning of the policy month of death.”  Option I comes with a smaller death benefit, but a lower monthly cost of insurance whereas Option II yields a larger death benefit, but a higher monthly cost of insurance.

Lupe paid her last annual Planned Premium of $53,877.72 on May 7, 2018. Five months later, in October 2018, she died.  Upon her death, Lincoln Life paid out the specified amount - $1.5. million – but declined to refund any portion of the Planned Premium that Lupe had paid earlier that year.  Niktewicz (“Plaintiff”), the trustee of the Trust, sued Lincoln Life alleging breach of contract and arguing that Lincoln Life’s refusal to refund a prorated portion of the Planned Premium that Lupe had paid violated New York Insurance Law 3203(a)(2).  Lincoln Life moved to dismiss the complaint arguing that Plaintiff’s interpretation of the statute was incorrect.  The District Court granted Lincoln Life’s motion after concluding that Section 3203(a)(2) did not cover Lupe’s Planned Premium because it was not a “premium actually paid for any period.”  Plaintiff appealed.

The question on appeal is whether a planned payment into an interest-bearing policy account, as part of a universal life insurance policy, constitutes “premium actually paid for any period” under Section 3203(a)(2).  Here, the question is whether Lincoln Life should have refunded a prorated amount totaling $31,428.83 of the $53,878 Planned Premium that Lupe paid in May 2018 before she died.

Section 3203(a)(3) requires that all life insurance policies “delivered or issued for delivery in” New York must contain a provision that “if the death of the insured occurs during a period for which the premium has been paid, the insurer shall add to the policy proceeds a refund of any premium actually paid for any period beyond the end of the policy month in which such death occurred.”

Lincoln Life argued on appeal that Lupe’s Planned Premium was neither made “for any period” nor “actually paid”, therefore placing it outside the ambit of the statute.  With respect to whether the Planned Premium was paid “for any period”, Lincoln Life argued that the statute requires the payment to have corresponded to a specific period of coverage, and that it is the monthly deduction, not the Planned Premium, that “actually pays for each monthly period of coverage.”  Plaintiff disagreed and argued that the statute does not further qualify the phrase “for any period” to provide that the paid premium must be “for any period of coverage guaranteed by the premium payment.”  Because Lupe paid her Planned Premium annually, Plaintiff maintains, the payment was clearly for a yearly period.

As to whether the Planned Premium was “actually paid”, Lincoln Life argued that the phrase denotes “the actual transfer of funds in exchange for insurance coverage.”  They stated that until the monthly deduction is charged against the Policy Account, the Policy Account value is not ‘paid’, but held in consideration of the non-insurance component of the Policy.  In response, Plaintiff countered that “actually paid” means what it says: a premium is ‘actually paid’ when there is a payment that is actually made, as opposed to a premium that was due, but not paid.

Because there was no controlling precedent to address these issues, the Second Circuit        certified this case to the New York Court of Appeals for a definitive resolution and posed the following question to the New York Court of Appeals:

Whether a planned payment into an interest-bearing policy account, as part of a universal life insurance policy, constitutes a “premium actually paid for any period” under the refund provision of New York Insurance Law Section 3203(a)(2).

Once the New York Court of Appeals has answered this question, the Second Circuit will retain jurisdiction to decide the case.



Scott D. Storm
[email protected]


09/22/22       Leccese v. Allstate Property and Casualty Ins. Co.
United States District Court, Eastern District of Pennsylvania
Insurer’s Motion for Summary Judgment Denied Where SWAT Team Damaged Home to Extricate Barricaded Insured as Questions of Fact Exist Whether the Loss was “Sudden” and “Accidental” and Whether the Criminal Acts Exclusion Applies.  Bad Faith Claim Dismissed as Insurer’s Use of Coverage Counsel Underscores the Reasonability of the Investigation, even if the Result of its Analysis is Eventually Determined to be Flawed

The court denied Allstate’s motion to dismiss Plaintiffs' breach of contract claim with respect to coverage for damage caused to their house by the police but did dismiss a bad faith claim under 42 Pa. Cons. Stat. § 8371.  Plaintiff husband (Joseph) had barricaded himself in the home he shares with his wife Carolyn.  Unable to enter her home, Carolyn called the police informing them that her husband had firearms. Police were dispatched to the home. Although they tried to convince Joseph to exit the house, they could not.  Pursuant to regulations, due to reporting Joseph’s need for emergency mental health care, he was not permitted to possess a gun. The police left messages on Plaintiffs' home phone telling Joseph to exit the house, yelled through a megaphone, and broke a window. The latter they did with Caroline's knowledge, but without her consent. After this attempt, police left and did not return for four days at which time a SWAT team entered the home. Carolyn objected and asked that they find another option, but officers refused. In the process of removing Joseph, the SWAT team destroyed twelve windows and used tear gas, which ruined the carpeting, among other damage. Joseph was sent to a hospital for treatment. Plaintiffs filed a claim with Allstate to cover the damage. But, after investigating and consulting with legal counsel, Allstate denied coverage citing Joseph's actions and the Policy's criminal acts exclusion and that the loss was not caused by "sudden and accidental direct physical loss to property."

The court found the terms "sudden" and "accidental" in the policy to be unambiguous.  Pennsylvania law counsels that an "accident" is an unanticipated event; it is something which occurs not as the result of natural routine but as the culmination of forces working without design, coordination or plan. And the more disorganized the forces, the more confusedly they operate, the more indiscriminately haphazard the clash and intermingling, the more perfect is the resulting accident. Accident has been defined in the context of insurance contracts as an event or happening without human agency or, if happening through such agency, an event which, under circumstances, is unusual and not expected by the person to whom it happens.

The term "sudden" is also unambiguous in that the Pennsylvania Supreme Court has determined that in insurance contracts "we do not believe that it is possible to define ‘sudden' without reference to a temporal element that joins together conceptually the immediate and the unexpected."  "Sudden" "conveys a ‘temporal meaning’, i.e., abruptness or brevity.”

Defendant argues the property damage is not sudden because police were present at Plaintiffs' home for multiple days and asked Joseph to exit the property multiple times. The plaintiffs disagree, arguing that a question of material fact remains as to whether they expected the SWAT team to enter and damage the home, or alternatively expected the extent of damage caused by the SWAT team.

The court said that sudden incidents occur over a shorter time period—what that time period is depends on the facts of the case. In this case, Allstate maintains the incident could not have been sudden because police remained outside

Plaintiffs' home for hours over a number of days, with police at the property on one day for eight hours. Yet, viewing the record in light most favorable to Plaintiff, the damage at issue in the instant case occurred on one singular day, not over a series of weeks, months, or years. The damage, and the manner in which the damage was carried out, was an abrupt change from prior assurances that police would not enter the home at all. Up until April 1, the only damage inflicted by the police was breaking one window, which they did without Plaintiffs' consent, but with Caroline's knowledge. The SWAT team's damage throughout the property occurred after four days without police presence and by a specialized police unit that had previously not been involved in the incident using rapidly escalated force on one single day: these actions were taken over Caroline's objections and are categorically different than officers' previous efforts to convince Joseph to leave the house. Given this, a reasonable jury could find that the incident was sudden.

Neither is Allstate's argument that the damage to Plaintiffs' house was accidental convincing. In Pennsylvania the "accidental" exclusionary clause applies only when the insured intends to cause a harm. Where a third party, not the insured, caused the damage as is the case here, the relevant inquiry: (1) views the incident from the perspective of the insured; and (2) determines whether the insured intended the injury, as opposed to whether the third party intended to inflict the damage. 

As a preliminary matter, both Plaintiffs are jointly insured under the Policy. If either Plaintiff had intent to cause the damage and thus the damage was not accidental, neither can recover.  If the language clearly establishes that the obligations of the insureds are joint, then the prohibited acts of one insured will bar all others from recovering.  Thus, to avoid coverage, Allstate may show that either Plaintiff had intent to cause the damage.

With respect to Caroline—she was out-of-state and not present at the home for the SWAT entry. Although she initially called for emergency support, she objected to the SWAT team's entry. Thus, she cannot be found to have intended the damage.

The evidence is, however, muddy as to Joseph's intent. Here, we know that Joseph intended to remain in his house—he had refused to come out. But it does not follow from that that he intended for the police to enter his home or damage his property. There is no evidence in the record that he had any inkling that the SWAT team was about to break its way in. Given that, a reasonable jury could find Joseph did not possess the requisite intent to cause the damage to the property. 

Defendant next argues a Policy provision which excludes any loss resulting from: "criminal acts . . . of any insured person, if the loss that occurs . . . may be reasonably expected to result from such acts". Defendant maintains that because Joseph unlawfully possessed firearms Plaintiffs cannot recover under the Policy.

Here, the police knew that Joseph possessed firearms and Caroline’s request to have him examined and treated under the Pennsylvania Mental Health Procedures Act had been granted and, therefore, it was illegal for him to possess them.  Individuals subjected to involuntary emergency examination and treatment under Section 302 of the Pennsylvania Mental Health Procedures Act are temporarily prevented from possessing a firearm.

Given that the police did not enter the property for six days after it was evident that Joseph was in illegal possession of weaponry, a reasonable jury could find that the SWAT team entered Plaintiffs' property and caused damage not because Joseph possessed a firearm, but because he refused to leave the house. Unlike other instances where criminal act exemptions were found to preclude recovery because of direct links between the criminal act and the harm, reasonable jurors may disagree here as to the causal connection between the criminal gun possession charge and the SWAT team's damage. As such, a genuine dispute of material fact remains on this point.

Defendant also requested summary judgement on Plaintiffs' bad faith claim which is premised on Allstate's investigative practices generally and the investigation actually performed in this matter.  That portion of Allstate’s motion was granted.  

Here, Allstate began its investigation soon after the loss, sent communications to the insured within four days of the damage, interviewed Caroline, referred the matter to legal counsel and, after receiving legal counsel's opinion, issued a denial under the intentional and criminal acts provisions of the Policy. While Plaintiffs would have had Allstate hire an appraiser or a private investigator, obtain additional witness statements, speak with the Pennsylvania State Police, obtain medical information about Joseph, investigate the status of his criminal charges and seek affidavits from unspecified individuals in this situation, Allstate's failure to do so does not amount to bad faith. So long as an insurer adopts a reasonable construction of the policy and uses that construction to investigate the claim and to inform its coverage decision there will, generally, be no bad faith. Here, Allstate's use of legal counsel to comment on the claim denial underscores the reasonability of the investigation, even if the result of its analysis is eventually determined to be flawed. Thus, Allstate's investigation here was objectively reasonable.  


09/08/22       General Ins. Co. v. Fleming
Supreme Court, Kings County
Temporarily Stay of Uninsured Motorist Arbitration Pending a Framed-Issue Hearing Whether an Accident and Fraud Occurred Where Black Box Evidence Indicated No Physical Contact with Another Vehicle and Respondent was Traveling at 103 MPH

This action arises out of Respondent's claims under the Underinsured Motorist Clause of the liability insurance policy issued to Respondent by Petitioner for injuries sustained because of a hit-and-run motor vehicle collision.  LM General Insurance Company moves in part to temporarily stay arbitration and to direct a framed-issue hearing between Petitioner and Fleming to determine whether there was an accident and fraud.

Petitioner argues that Respondent has failed to demonstrate physical "contact" with an uninsured vehicle.  Petitioner accessed and analyzed the data from Respondent's vehicle's Event Data Recorder ("the Black Box") which indicated that the vehicle was traveling at 103 MPH at the time of the accident, however it failed to demonstrate a collision with another vehicle.

In opposition, Respondent argues that Petitioner's motion should be denied in all respects since at the time of the accident, Respondent was injured at the scene and transferred via ambulance to Jamaica Hospital. In support of his opposition, Respondent submits the police report taken at the scene of the accident, his Examination Under Oath, an Independent Chiropractic/Acupuncture Medical Examination, and his Emergency Room record where Respondent claims "he was driving on the Parkway when his car was clipped by another car."

The party seeking a stay of arbitration has the burden of showing the existence of sufficient evidentiary facts to establish a preliminary issue which would justify the stay.  Thereafter, the burden is on the party opposing the stay to rebut the prima facie showing.  Where a triable issue of fact is raised, including whether there was physical contact with the insured's vehicle and an alleged hit-and-run vehicle, the Supreme Court, not the arbitrator, must determine it in a framed-issue hearing, and the appropriate procedure under such circumstances is to temporarily stay arbitration pending a determination of the issue. 

The Court finds that triable issues of fact exist as to whether an accident occurred and whether the driver's vehicle was uninsured since Petitioner has not satisfied its burden to establish a preliminary issue which would justify a permanent stay of arbitration. Petitioner has submitted a letter sent from the insurance company to Respondent stating in a conclusory manner that Respondent's vehicle's Event Data Recorder did not demonstrate contact between Respondent's vehicle and another vehicle. Respondent in opposition did not submit an affidavit, and the Examination Under Oath submitted is incomplete as it does not contain any of the testimony taken. Additionally, the submitted emergency room report and police report made by officials who were not an eyewitness containing hearsay statements regarding the ultimate issues of fact may not be admitted into evidence for the purpose of establishing the cause of the accident in question. 

See also Dan’s section above:  Misrepresentations by Insured in Policy Application Can Void No Fault Coverage if Proper Proof is Submitted.



Katherine A. Fleming
[email protected]

09/23/22       Huntington Ingalls Indus., Inc v. Ace Am. Ins. Co.
Supreme Court of Vermont
Complaint Sufficiently Alleged Direct Physical Loss or Damage Arising Out of The Presence Of COVID-19 To Survive Judgment on The Pleadings

Insured Huntington Ingalls Industries, Inc. and insurer Huntington Ingalls Industries Risk Management LLC sought a declaratory judgment that there was coverage under a property insurance policy for certain losses incurred by Huntington Ingalls Industries due to the COVID-19 pandemic. Insured, Huntington Ingalls Industries, Inc., is the largest military shipbuilding company in the United States and provides professional services to government and industry partners. In March 2020, insured purchased a property insurance policy (Global Policy) from insurer Huntington Ingalls Industries Risk Management LLC, its captive insurance subsidiary and a Vermont corporation. That same month, insurer purchased policies from multiple reinsurers to reinsure all its obligations to insured under the Global policy.

During the pandemic, insured kept its shipyards open but made changes to its operations to comply with CDC guidance and protect employees. These changes included modifying and staggering work to reduce crowding and achieve social distancing, sanitizing and cleaning at its facilities, and placing physical barriers to restrict virus transmission. Insured implemented policies requiring employees who tested positive for COVID-19 to isolate and not return to work until CDC quarantine recommendations were satisfied and employees who had close contacts with someone who tested positive to self-quarantine for fourteen days or until cleared through testing. As a result of the presence of COVID-19, insured’s shipyards “were and are not capable of performing their essential functions at their intended capacities.”

In September 2020, insured and insurer sued reinsurers seeking a declaratory judgment that they are entitled to coverage under the policy for property damage, business interruption, and other losses suffered because of SARS-CoV-2, the pandemic, and civil authority orders. The complaint alleges the pandemic caused “direct physical loss or damage to property” when the virus adhered to surfaces for several days and lingered in the air for several hours at the shipbuilding yards. The alleged losses include disruption in orderly construction and repair of vessels, schedule impacts in the construction and repair of vessels, expenses—including increased labor and information technology costs—incurred to continue as near to normal operations as practicable, loss of profit caused by the change in labor volume, and other time element losses

Before any discovery, insured and reinsurers filed cross-motions for judgment on the pleadings pursuant to Vermont Rule of Civil Procedure 12(c). Reinsurers sought complete judgment on the pleadings, arguing that insured had not sufficiently alleged that “direct physical loss or damage to property” had occurred. Insured filed three motions for partial judgment on the pleadings. Following a hearing, the trial court granted reinsurers’ motion for judgment on the pleadings and consequently denied all of insured’s motions.

On appeal, the overarching issue was how to interpret “direct physical loss or damage to property” in this insurance policy. The Vermont Supreme Court found that under the unambiguous language of the insurance policy, “direct physical loss or damage to property” included two distinct components: “direct physical damage:” and “direct physical loss.” “Direct physical damage” requires a distinct, demonstrable, physical change to property. “Direct physical loss” means persistent destruction or deprivation, in whole or in part, with a causal nexus to a physical event or condition. Purely economic harm will not meet either of these standards. Looking only at direct physical damage, the Court considered the allegations that the virus causing COVID-19 has been continuously present at insured’s shipbuilding facilities. There were COVID-positive employees, those employees were infected at work, and infected persons spread the virus to surfaces. The virus can “adhere” to surfaces, transforming the surface into a fomite. This process of the virus “adhering” to surfaces allegedly caused “detrimental physical effects” that “altered and impaired the functioning of the tangible, material dimensions” of the property. Because of this alteration, the property could not function for its intended purpose and insured’s business had to operate at a reduced capacity. To redress these physical alterations, insured took and will continue to take “steps that involve physical alterations to its insured locations,” such as installing barriers and devices and redesigning physical spaces. The Court found that, taken together, these statements adequately alleged that the virus had physically altered property in the insured’s shipyards by adhering to surfaces. That the virus “adheres” to property, thus “altering and impairing” it in a tangible way, is a “bare bones statement” that provides reinsurers with notice of insured’s allegations for how the virus can cause “direct physical loss or damage to property.”

Moreover, insured alleged that, as a result of such physical alterations to its property, it had to take steps to remedy the situation by physically altering its property in certain ways, including sanitization procedures, installation of physical barriers and devices, and redesign of physical spaces. This bolstered the argument that a distinct, demonstrable physical alteration occurred and is something that is in need of “repair” to restore business operations.

Because the complaint plausibly alleged “direct physical damage,” reinsurers were not entitled to judgment on the pleadings, the Court reversed and remanded the case to allow further factual development in the trial court.



Evan D. Gestwick – Admission Pending
[email protected]

09/20/22       Pizzarotti, LLC v. Zurich Am. Ins. Co.
Supreme Court of the State of New York, New York County
The Policy-Imposed Time Limit in Which to Bring a Suit Against the Carrier Runs at the “Inception” or “Commencement” of the Grounds to Make the Claim

The Plaintiff had entered a contract with a non-party called 151 Maiden to act as a construction manager on a project to construct a hotel and connected retail space. 151 Maiden was the project owner. In the course of the work performed, the main electrical conduits were improperly installed, which resulted in damage caused by the weight of the above concrete slab. Thereafter, the project also sustained water damage from ground water flowing through and coming out of the improperly installed conduit. Importantly, the loss occurred on August 11, 2016.

151 Maiden was insured by Zurich, the defendant here, under a builder’s risk insurance policy, which covered, inter alia, extra or unexpected expenses incurred by “an insured” during a given construction project. By reason of the trade contract between 151 Maiden and the plaintiff here, the plaintiff was named an additional insured under 151 Maiden’s policy. The plaintiff incurred extra expenses because of the unexpected water damage and made a claim under the Zurich policy. For reasons not important to the overall point of this decision, Zurich denied the plaintiff’s claim.

The plaintiff then sued Zurich for breach of the policy on February 6, 2019—nearly 2 years and 6 months after the loss occurred. The policy included a provision which provided that “. . . [n]o one may bring a legal action against the Company under the policy unless . . . [t]her action is brought within 2 years after the date on which the loss or damage commenced.” Because the plaintiff delayed for approximately 2 years and 6 months in bringing its action against Zurich, Zurich moved to dismiss the case due to this policy provision. The plaintiff argued that because the provision does not include the word “physical,” the provision is ambiguous and therefore should be construed in the light most favorable to it.

However, the Court disagreed with the plaintiff and explained that the use of the word “commenced,” as here, is synonymous with the word “inception,” which New York case law has held to refer to the occurrence of the event giving rise to the claim of liability and not to the accrual of liability. This is legalese for the following proposition—when an insurance policy provides an enforceable time limitation within which an insured may sue them for breach of the policy, that time limit begins to run on the day the reason for the insurance claim happened, not on the day the claim was denied.



Heather A. Sanderson
[email protected]

09/25/22       Post Tropical Cyclone Fiona Slammed Atlantic Canada

Just after midnight on Saturday, September 25, 2022, post tropical cyclone Fiona made landfall in Nova Scotia just south of the Northumberland Strait. It tracked over Cape Breton Island, Prince Edward Island, and the Gulf of St. Lawrence, hitting the Magdalen islands and southwestern Newfoundland before heading up the Labrador coast. Fiona shattered records for the deepest low-pressure system ever to be recorded on Canadian soil.  The screeching wind was terrific:  -177 km/h in Wreckhouse, N.L., 178.6 km/h in Arisaig, N.S., 166 km/h in Grand Etang, N.S., 149 km/h in East Point, P.E.I. and 148.7 km/h in Sydney, N.S.

The storm surge was 12-20 metres above high tide.  Thousands throughout the region were without power.

Although these stats may pale compared to Hurricane Ian that is battering Florida at the time of writing, keep in mind that this storm was historic in terms of its intensity and the regional misery that it generated. Coastal homes that have stood for well over a hundred years were swept out to sea along with business and the livelihoods of those who depend upon those businesses.

Credit rating agency DBRS Morningstar has estimated that the insured damage inflicted by Fiona is in the range of $300-$700 million. However, most of the damage that Fiona inflicted is not insured. Homeowner and tenant insurance in Canada is not regulated.  As a result, there is no common policy and, therefore, no common coverage. Nonetheless, most policies cover damage caused by windstorm and rain such as:

  • Losses caused by flying debris (such as ‘flying’ propane tanks, roofing materials or fallen trees and/or branches)
  • Losses to the structure and contents from water entering through openings suddenly caused by wind.
  • Water damage in a basement due to a sewer backup but only if the policy is endorsed with sewer backup coverage.   Sub-limits usually apply. The coverage may be nullified if the water damage was also caused by uninsured storm surge or overland flooding.
  • Food stored in refrigerators and freezers is usually covered for power interruption, subject to sub-limits
  • Alternative living expense incurred to comply with evacuation orders may be covered with or without insured damage.

As for vehicles, damage to vehicles from wind or water – including storm surge - is usually covered if comprehensive coverage was purchased.

Home insurance and business insurance policies generally do not cover damage caused by coastal flooding and/or storm surge.

Damage to a primary residence caused by storm surge may result in eligibility for provincial and federal funding through the Disaster Financial Assistance Arrangement (DFAA) program. This program is designed for homeowners that are unable to obtain coverage through the private insurance market. Secondary residences and cottages are excluded from these programs.

Why Storm Surge Coverage is Currently Unavailable

The Insurance Bureau of Canada explains on its website that the risk of storm surge cannot be priced at an affordable level without highly complex risk modelling.  Industry representatives are working with the federal government to create a national public-private insurance program for overland flooding that offers protection to all Canadians. As part of this program, insurers are advocating that flood mapping/risk modelling, along with physical mitigation, improved building codes and land-use planning, are all necessary parts of Canada’s response to flood risk and a larger, national Climate Change Adaptation Strategy.

The Insurance Bureau of Canada further reports that a public-private insurance program is part of this strategy.  A program of that nature would help close the insurance protection gap for the approximately 1.54 million homes in Canada that are at such high risk of flooding that private insurance for these homeowners is neither affordable nor available.

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