Volume XXVII, No. 25 (No. 724)
Friday, May 22, 2026
A Biweekly Electronic Newsletter
As a public service, Hurwitz Fine P.C. is pleased to present its biweekly newsletter, providing summaries of and access to the latest insurance law decisions from the New York, New Jersey, 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 love situations.
Greetings from warming Buffalo and places east. Sad to see our Sabres lose in Game 7, but it was a fun game to attend.
We congratulate Scott Storm on his successful Coverage Pointers program on fraud and SIU. If you missed it, or if you have any questions for him, send him a note at [email protected] He’d love to talk “fraud” with all comers. The next program is right around the corner. I am not sure about the presenter though. He’s a miserable guy without a sense of humor. Oh wait, it’s me. But that’s still a fair description.
For our newer subscribers, and we always have new ones, we call this the “cover letter”, which we know is the fun part of our bi-weekly offering. The newsletter, Coverage Pointers, which will surely become your favorite coverage publication, is attached. You’ll find our 724th issue, and for those who haven’t read the previous 723, shame on you. But hope is not lost, past issues of CP are available on the website and are searchable.
In our cover letter, we announce educational offerings, highlights and headlines. At the bottom of this note, you’ll find the headlines for the cases reported in much greater detail in the attached issue of the newsletter. In this cover note, you’ll find notes from each of our column editors (13 or so). Reach out to them (or to me) if you have questions about the cases summarized. You will also find newspaper stories from 100 years ago today, reflecting on what was important or relevant at the time or, often, what was happening 100 years ago that is still happening today.
Coverage Pointers University – Next Program
Jun 18, 2026
12:00 PM in Eastern Time
New York Liability Protocols
Doing it Right to Prevent Disaster – Protecting the Disclaimer, Preserving Coverage Defenses
Present Capacity – 500 Zoom Links, Currently 325 Already Registered
Join Insurance Coverage Co-Chair Dan D. Kohane for a practical and essential webinar on navigating New York’s unique and unforgiving liability coverage landscape. Unlike most jurisdictions, a reservation of rights letter may not be enough to preserve coverage defenses where Insurance Law § 3420(d)(2) applies—making precision and timing critical. This session will walk through when a carrier must issue a prompt and specific disclaimer, why delay can result in waiver of key defenses, and how New York’s statutory framework governs bodily injury and wrongful death claims.
The program will also address those who must receive a disclaimer, including insureds, injured parties, and potential claimants, and clarify the important distinctions between lack of coverage, policy exclusions, and breaches of policy conditions. We will also touch on the indirect impact on horizontal exhaustion claims as a result of the recent adoption of the AVOID Act, which has altered timing of third-party lawsuits for contribution and indemnity. Attendees will gain practical guidance on drafting effective disclaimers, understanding the limits of reservation of rights letters, handling partial disclaimers, and navigating related issues such as independent counsel and recoupment of defense costs—helping avoid costly and irreversible coverage missteps.
For those who need to keep up to date on insurance coverage between issues of Coverage Pointers, we’re happy to help. Just follow me on LinkedIn and we’ll keep you up to date. I’m easy to find – my linked in name is (ready for this unusual and unexpected name): Kohane and you can find me here: https://www.linkedin.com/in/kohane/
Need a Mediator or Arbitrator, Give a Call:
A growing percentage of my practice has been a mediator (and sometimes as an arbitrator) in insurance coverage, commercial, personal injury, and other disputes. With a robust national client base, I am regularly called on by friends and colleagues from around the country, folks who know me and trust me, to help resolve disputes. Often, particularly in mediated matters, I know the insurers and lawyers on both (or several) sides of the dispute. Since they all trust me as a fair dealer, they feel comfortable having me try to help close the file (and avoid precedent). Just pick up the phone, 716.849.8942 or send an email to [email protected] and I’ll try to help.
Newsletters:
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 V. Christopher Potenza 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 Elizabeth Midgley at [email protected] to subscribe.
Illegal Strike Led to Italian Imprisonment – 100 Years Ago:
The Buffalo News
Buffalo, New York
22 May 1926
WOMEN IMPRISONED
FOR ILLEGAL STRIKE
ROME, May 22. – One hundred women employed in a Milanese factory are the first to feel the force of the recently enacted law making unauthorized strikes and lockouts crimes punishable by imprisonment.
The women, who went on strike because of a wage cut, have been arraigned by the police before a magistrate on charges of evading the law dealing with organized collective workers.
Peiper on Property (and Potpourri):
Readers of this publication will recall how excited we have been to open offices in suburban Boston and suburban Rochester over the past 18 months. With our increased reach, we have been able to extend our services to our long-standing clients into new and diverse venues. And, we’ve picked up a few new friends along the way too.
To recognize our investment in our new locations, your author has agreed to run the Corporate Challenge with our colleagues from the 5-8-5 (that’s Rochester, for those of you not in the know). So, I finish up this week’s note before changing into my running shorts and stretching long dormant hamstrings and calves. Here’s hoping the promise of a Genny Cream Ale and Garbage Plate at the finish line will keep me moving forward tonight.
Today, in case you are wondering, is “National I Need a Patch for That Day” and “National End of the World Day.” An ominous trend, indeed, but perhaps there is something to hell freezing over and yours truly running 3.5 miles.
It is also National Chardonnay Day which, doubtless, will be celebrated in my house this evening. So, raise a toast to our fearless Rochester lawyers about to kick off Memorial Day Weekend with sore muscles and bruised egos.
In all seriousness, we do encourage you to take time from your golf swings and burned hot dogs to remember the reason for the weekend. Despite how difficult things may seem from time to time, we live in the most peaceful and prosperous time in history. Peace, though, is hard won, and would not be possible without the selfless sacrifice of generations of fighting men and women. Take a moment to remember and respect what they gave up so we could have so much.
That’s it for this week. See you in two more.
-sp
P.S. Boston – Start your training now, cause the Corporate Challenge Road Show is headed for lobster rolls next Spring.
Steve
Steven E. Peiper
[email protected]
Drinkers, Take Your Time – 100 Years Ago:
The Buffalo News
Buffalo, New York
22 May 1926
HALF AN HOUR OVER DRINK
NOT TOO LONG, JUDGE RULES
LONDON, May 22 (AP) – How long should a man spend over a drink? Is a question which a Galway court has decided in the case of six soldiers of the Irish Speaking Battalion of the National army. The troopers were prosecuted for remaining too long in a public house on Sunday afternoon tippling. The police contended that a half hour the men had spent over their beverage was too long. The magistrate, however, held that if a man were sociable inclined he easily could spend an hour over one drink. Therefore he dismissed the case.
Lee’s Connecticut Chronicles:
Dear Nutmeggers,
It’s been a whirlwind: Tampa, Buffalo, Mexico City, West Palm Beach, Chicago, Buffalo, interspersed with trips to Manhattan. I’m exhausted and just want to sleep in my own bed.
The big news is that we moved one of our daughters into her first post-college apartment (she graduates on Friday!). Dad has gone from paying tuition to paying rent. Hopefully, the rent checks will taper off. Right now, we’re looking for the interim job to hold her over until the first permanent job. Two more graduating this season, and the last one next year.
Here’s to all the graduates launching successfully.
Until next edition, keep keeping safe.
Lee
Lee S. Siegel
[email protected]
Huge Jump in Gasoline Price – 100 Years Ago:
The Buffalo News
Buffalo, New York
22 May 1926
GASOLINE ADVANCED
ONE CENT A GALLON
NEW YORK, May 22 (U.P.). – Gasoline prices advanced in a large territory again yesterday. The standard Oil of New Jersey advanced its prices one cent a gallon.
That was followed by similar increases by the Texas company, Gulf Refining and Magnolia in the Texas territory.
Ryan’s Federal Reporter:
Hello Loyal Coverage Pointers’ Subscribers:
It was a good run. The Sabres have lost and, while Game 7 was a thriller, the thrill ultimately ran out. There is always next year (some might say this year was unlikely, right Whit?).
This edition of my column tackles a Second Circuit Court of Appeals decision involving Supplemental Spousal Liability Insurance. What happens when an insured opts out before the effective date of the statute requiring an opt out? After opting out, what notice is required for subsequent policies and how much does that matter? The answers may shock you.
Until Next Time…
Ryan
Ryan P. Maxwell
[email protected]
Nose Adjuster Doesn't Cause Cancer – 100 Years Ago:
The Buffalo News
Buffalo, New York
22 May 1926
QUESTIONS AND ANSWERS
Another poor Dupe.
I would like to know if a person could get cancer from using a nose adjuster. I also wonder if a nose adjuster could make a nose smaller. I am thanking you in advance. (P.R.)
Answer – It is unlikely, but if you ever should see a book by Dr. N. Webster, look up the meaning of thanks and you will see how you tried to spoof me about that. It is ridiculous to imagine that a “nose adjuster” can alter the shape or size of the nose; that is just a scheme for the exploitation of gullible folk who like to be humbugged. Any prolonged, slight irritation as by the pressure of such an absurd contraption, may predispose to the development of cancer. Only surgery will alter the shape or size of the nose – not tinkering by the “plastic” or “cosmetic” charlatan, but an operation by a reputable surgeon.
Storm’s SIU:
Hi Team:
Still writhing from the Sabres and Bandits losses.
Slim pickings in SIU related cases this edition. As such, I bring you this ...
- First-Party Property Case Dismissed Due to Breach of the Two-Year Contractual Suit Limitation Condition. Time Limitation Runs from the Date on Which the Direct Physical Loss or Damage Occurred, Not the Date of the Claim Denial.
Let’s meet here again in two weeks!
Scott
Scott D. Storm
[email protected]
Insurance Fraud Isn't a Recent Invention – 100 Years Ago:
The Buffalo News
Buffalo, New York
22 May 1926
3 HELD IN ALLEGED
INSURANE CO. FRAUD
Conspired to Steal Auto, Now
Charged With Larceny
Conspiracy to defraud a local automobile Insurance company is charged against three men who were arrested by Buffalo detectives Friday. The men, all of whom are charged with grand larceny, first degree, are Louis Slabey, 36 years old, of 227½ Myrtle avenue, Youngstown, Ohio: Robert Williams, 35 years old, 437 Simon avenue, Lackawanna, and Anthony De Pasquale, 25 years old, 33 Lafayette street, Silver Creek, N. Y.
Detectives Britt and Downey, who made the arrests, say that Slabey connived with Williams and De Pasquale last March to steal his car, so that he might collect insurance on it. The automobile was recovered in Silver Creek.
Fleming’s Finest:
Hi Coverage Pointers Subscribers:
This edition’s case from the Texas Supreme Court is short and sweet. The Court held that since the parties’ dispute was at least in part about the dollar amount of loss, potential coverage disputes did not defeat the contractual right to appraisal. Further, the Court rejected the insured’s argument that the insurers’ alleged bad faith claim handling excused the insured from compliance with the policy’s appraisal clause.
While the weather has been nice, I’ve been spending time with family and trying to get outside as much as possible. Hope you have a nice Memorial Day Weekend!
See you in a fortnight,
Kate
Katherine A. Fleming
[email protected]
It's OK to Date a Foreigner so Long as You are Not Disobeying Mom – 100 Years Ago:
Wilkes-Barre Times Leader, the Evening News
Wilkes-Bare, Pennsylvania
22 May 1926
ADVICE TO THE LOVELORN
By BEATRICE FAIRFAX
The Foreign Born Suitor
Dear Miss Fairfax:
I am seventeen. I go with a young man of twenty. I couldn't ask a better friend except that was born in the "old country." I don't mean he can't speak English because he can speak it very well. But my mother doesn't like him and I don't like to displease her.
She has no reason to dislike him except that he isn't a native-born American. I have no intention of getting married as I know I am too young. But I won't give him up, either.
I never go anywhere except to the theatre with him because neither of us likes to run around much. What shall I do? GRACE
Why do you not have affectionate talk with your mother. Grace, asking her to permit to keep the foreign-born young man for a friend provided you think of him as just a friend and go about also with your other friends? Ask her to permit him to call and take you the theatre now and then.
In this way, she will get to know him better and may learn to like and trust him. But do not disobey your mother in this matter. She is older you are and her judgment is better. She may see more plainly than you can now, that you and the young man are not suited to each other as friends.
Gestwick’s Garden State Gazette:
Dear Readers:
With the Sabres out of the playoffs, we move on to the Blue Jays season. The Jays are currently in a four-game stretch with the Yankees, currently tied 1-1. I’ll keep this note short, in the hope that I can get home in time to watch Game 3.
The case I have for you this week is the Supreme Court result of a case I wrote about in our February 28, 2025, newsletter. That write-up is available here.
The Supreme Court upheld the decision of the Appellate Division, finding that the Directors and Officers insurer was not estopped from raising its capacity exclusion, since it reserved its right to rely on that exclusion from the outset of the claim, and that the capacity exclusion barred coverage for the totality of the claims asserted against the insured.
That is all for this edition. See you in two more weeks.
Evan
Evan D. Gestwick
[email protected]
Black Man Acquitted for White Man's Death Where White Mob Stormed His House – 100 Years Ago:
The New York Age
New York, New York
22 May 1926
Dr. Ossian Sweet’s Brother
Is Cleared After Trial
Lasting Two Weeks
RIGHT OF NEGRO TO
DEFEND HOME FIXED
First Trial of Eleven Resulted
In Mistrial; N.A.
A.C.P. Paid Darrow
Detroit, Mich. – In the case of Henry Sweet, charged with murder, the jury deliberated just four hours and then brought in a verdict of “Not Guilty.”
Henry is a brother to Dr. Ossian H. Sweet, who with his wife Gladys, bought a home at 2905 Garland avenue, a white neighborhood, which was attacked by a white mob when the Sweets moved in on September 9, 1925. It was during this attack that Leon E. Breiner, a white man was shot and killed. Henry, the doctor, and Mrs. Sweet, with eight other friends who were present in the house at the time, were arrested and the eleven were charged with homicide.
The state first put the eleven defendants on trial but on November 27, 1925, the jury reported a failure to agree and the trial came to an end. Eight of the defendants were immediately admitted to bail, but Dr. Sweet, Henry and Bernard C. Morse were not granted bail privileges until two weeks later. Mrs. Sweet had been granted bail a couple of days after the rioting in September, the only one granted this privilege.
O’Shea Rides the Circuits:
Readers,
Tonight, I will engage in a battle of wills with certain un-named office colleagues in a 5k. I have trained for several weeks in preparation for this event. The training included heavy bouts of sedentary desk work, walking the dogs, and cleaning the house. There was also a stag party involved along the way. Judging from my training regime, I do not have a shot.
This week I have quick read regarding UM/UIM coverage. The issue raised under Louisiana law is whether the insured met her burden to establish a lack of coverage for both the at-fault driver and the vehicle owner.
Until Next Time,
Ryan
Ryan P. O’Shea
[email protected]
Another Prediction – Don’t Recall It Happening – 100 Years Ago:
Marysville Journal-Tribune
Marysville, Ohio
22 May 1926
BATTLE OF ARMAGEDDON WILL BE FOUGHT IN THE HOLY LAND IN 1936, IS PREDICTION; ENGLISH CLERGYMAN DECLARES CHRIST WILL BE PRESENT ON THE MOUNT OF OLIVES
LONDON, May 22. – The real battle of Armageddon will be fought in the Holy Land in 1936. It will be preceded by a war between Great Britain and Turkey, followed by an invasion of Palestine by Russia and her allies. IT will culminate on September 16, 1936, in the overthrow of the invaders in the most terrible battle the world has ever known.
This, in brief, is the prediction of the Rev. Walter Wynn, an English cleric who has made himself famous by his predictions of important events, in his book, “What Will Come to Pass,” published here.
LaBarbera’s Lower Court Library:
Dear Readers:
After a busy week, I have a case for you on whether an e-Scooter is a device “designed to assist the handicapped.” Check it out!
Isabelle
Isabelle H. LaBarbera
[email protected]
Well, Some of These Predictions Came True – 100 Years Ago:
The Kingston Whig-Standard
Kingston, Ontario, Canada
22 May 1926
1950 HIGHWAY
PREDICTIONS MADE
Roads 25 years from now will be a minimum of 120 feet in width, well lighted at night, policed by stop-and-go signals and all surface drainage will be carried in storm sewers beneath the ground, according to predictions made by engineers.
Further predictions are that telephone, electric light wires and others will be carried underground. All railroad crossings will be eliminated by grades. Highways will be beautified and speed limits will be placed at a minimum rather than a maximum.
Lexi’s Legislative Lowdown:
Dear Readers,
I am looking forward to the long weekend and Memorial Day celebrations. I am hoping the forecast clears up and we are able to spend some time outside!
This week we discuss proposed legislation that would permit the use of autonomous vehicles, such as Waymos, in Albany and Rensselaer counties.
Thanks for reading,
Lexi
Lexi R. Horton
[email protected]
I Guess That Works – 100 Years Ago:
The Cleveland Press
Cleveland, Ohio
22 May 1926
THEY LIKE EACH OTHER
Court Discharges Pretty Girl After
Mutual Admiration Session
Pretty Miss Florence Keeh, 28, of 2064 E. 82d street, Saturday was acquitted pf a traffic offense charge after a mutual admiration session with Judge Lee E. Skeel.
Miss Keeh was arrested late Friday by Patrolman James McDonald on a charge of driving thru the safety zone at E. 71st street and Superior avenue.
“The traffic officer didn’t like me very well,” Miss Keeh told the judge. “I disagree with him,” said the judge. “I like you very much.”
“I like you too, judge.”
“Discharged.”
Victoria’s Vision on Bad Faith
Dear Readers,
Reporting from Dallas this week and then taking a break from traveling for a bit.
This week’s bad faith case is from the SDNY whereby the Court allowed the Plaintiff to amend its complaint to clarify its bad faith cause of action against its insurer.
Have a good weekend,
Victoria
Victoria S. Heist
[email protected]
He Came Up for a Cup of Coffee – 100 Years Ago:
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Pryor McBee |
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Born: June 20, 1901 |
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Died: April 19, 1963 (aged 61) |
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Batted: Right Threw: Left |
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MLB debut |
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May 22, 1926, for the Chicago White Sox |
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Last MLB appearance |
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May 22, 1926, for the Chicago White Sox |
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MLB statistics |
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1 |
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1.1 |
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6.75 |
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Teams |
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Pryor “Lefty” Edward McBee (June 20, 1901 – April 19, 1963) was a pitcher in Major League Baseball who appeared in one game as a reliever for the 1926 Chicago White Sox, pitching 1.1 innings. That game was 100 years ago today. He came in relief in the seventh inning, walked three, struck out one, and never again appeared in a Major League game. He did spent seven years in the minor leagues and pitched in 165 games.
The Chicago Tribune reported in 1926 that McBee's income from baseball was "merely incidental" because he "owns some Oklahoma oil lands." McBee was one-eighth Choctaw] and an enrolled member of the Choctaw Nation.
While pitching for the Jacksonville Tars during spring training in 1928, McBee struck out both Babe Ruth and Lou Gehrig in one inning.
Editor’s Note: In his obituary, in the Auburn (CA) Journal, the article mentioned that he played for the White Sox in 1918 (only eight years off) and said nothing else about whatever he did for the rest of his life (he was in the lumber business for 25 years, I learned).
Shim’s Serious Injury Segment
Hi Readers,
Hope everyone has been well since our last column. Today I’d like to share an opinion on the 1941 MLB MVP race between Ted "Splendid Splinter" Williams and Joe "Yankee Clipper" DiMaggio, as we have reached the 85th anniversary of this legendary rivalry. Often remembered among fans lucky enough to have seen it and baseball historians who followed, as the "Summer of Heroes", this celebrated race pinned two since unmatched feats against one another for one MVP award.
During the eve of World War II, Americans looked forward to what would be their second to last traditional baseball season before the United States’ entry into the war. It watched one man reach the .400 batting average mark for the last time and another man set the consecutive-game-hit-streak to 56 games. However, a closer look reveals that this was no contest at all. In my view, Ted Williams was the superior hitter that season and accomplished a far more impressive statistical line than any other player that season.
During the 1941 season, Ted Williams batted .406/.553/.735, with a 10.4 bWAR, 235 OPS+, 37 home runs and 120 RBI. Williams led baseball in each of the aforementioned statistical categories with the exception of RBI, which he finished second to DiMaggio’s 125 RBI. That same season, DiMaggio set the record for consecutive games with a hit at 56-games. Ironically, during DiMaggio’s 56-game streak, DiMaggio batted .408 while Williams batted .412 over the same timeframe. On the same day that DiMaggio’s hitting streak began, Williams began a 23-game hitting streak of his own, which ended on June 8, 1941, during a game in which Williams walked three times (not to mention an MLB-leading 147 walks that season).
The New York Yankees won the 1941 World Series over the Brooklyn Dodgers – their fifth World Series Championship in six seasons. DiMaggio, a media darling, fan favorite and multi-time World Series Champion, won the MVP award over Williams. Who should win the MVP? The best player or the winning player? The numbers don’t lie.
If this was of any interest to you, I have hyperlinked a great mini documentary about Williams’ life and career here. He is my favorite historic player, a childhood idol of mine and an American war hero.
This week I have shared a case decided by the Appellate Division, Second Department, which denies a motion to set aside jury findings on “permanent consequential limitation” and “significant disfigurement” categories, deleting the sua sponte order for new trial on “significant disfigurement,” affirming the grant of new trial on damages, and awarding one bill of costs to plaintiff.
See you in the next issue!
Stephen
Stephen M. Shimshi
[email protected]
No Kissing! – 100 Years Ago:
The Buffalo Times
Buffalo, New York
22 May 1926
PERIL IN KISSES
Lips Breed Evil Looking
Germs.
FAYETTEVILLE, Ark., May 22. – Kisses, powder puffs, and the tips of lead pencils are taboo with students of botany at the University of Arkansas.
As a laboratory experiment one of the students – a boy – was asked to kiss a slice of potato. This potato was then interned under an airtight glass dish. Several days later the students examined it. Four different kinds of molds were found. They were described as the kinds of mold found on jellies and old shoes, and there were several colonies of red, yellow, white, and purple bacteria.
New England Almanack
Greetings,
For this issue, we bring to your attention two recent Rhode Island decisions concerning creative arguments advanced by counsel for the insureds in their effort to collect additional funds following a settlement and an appraisal. In both matters, the Court rejected the arguments for the reasons stated in their opinions. The decisions offer helpful guidance on resolving disputes motived by buyers’ remorse.
Enjoy the read!
Barbara
Barbara A. O’Donnell
[email protected]
Alex
Alexander G. Henlin
[email protected]
Iryna
Iryna N. Dore
[email protected]
No Argument From Me – 100 Years Ago:
The Buffalo Times
Buffalo, New York
22 May 1926
She Believes Women Should BE
Scantily, Clad, Strolling, Golfing
ATLANTIC CITY, N. J., May 22.- Women will be as scantily clad when they take an evening stroll if or they play a round of golf as they are now when they dance, if they follow the advice of Miss Sylvia Bayard of the child health division of the New York Board of Education.
Miss Bayard believes that only in discarding all clothing, but the few essentials can women benefit by physical exercise.
"If they would abandon these things in the club lockers as they do when they dance," Miss Bayard said, "they would realize in just what way they are cramping the muscles of their body."
North of the Border:
Playoff hockey is a game of inches, but the Buffalo Sabres–Montreal Canadiens series has taken that cliché and turned it into a case study. A best‑of‑seven decided in a single overtime period of Game 7, with the score tied and the season hanging in the balance, is the purest expression of risk and opportunity: One incomplete blue line check and you are golfing; one well‑timed jump into the rush and you are packing for the Eastern Conference Final. One team moves on, the other cleans out its lockers.
It is only fitting, then, that this week’s column looks at a civil case built on the same razor‑thin margins. In Lau v. ICBC, the court was asked to decide whether a missed opportunity to settle within policy limits amounted to a compensable “loss of chance,” and whether the insurer and counsel involved should bear responsibility for letting that chance slip away. Just as in sudden‑death overtime, the question is whether the risks taken – or not taken – were reasonable in the circumstances, and who pays the price when the loss of that chance turns out to be the difference between financial safety and bankruptcy.
Heather
Heather A. Sanderson, K.C.
Sanderson Law
Calgary, Alberta, Canada
[email protected]
Headlines from this week’s issue, attached:
KOHANE’S COVERAGE CORNER
Dan D. Kohane
[email protected]
- Question of Fact Existed As Whether Insurance Broker Negligently Allowed Policies to Lapse
- Leasing Company’s Various Attempts to Be Let Out of Lawsuit on the Basis of the Graves Amendment or Pay Money into Court, All Failed
- In a Well-Reasoned Decision, Court Finds Classification Limitation Precluded Coverage and Rules Relating to Disclaimer Letter Are Inapplicable
- Excess Policy Over CGL Coverage Is Never Reached Because of Unlimited Employer’s Liability Coverage
PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper
[email protected]
- Ambiguity in the Application of “Household” and “Reside” Precludes MIC General’s Motion for Summary Judgment
- Dispositive Findings on Negligence (and Lack Thereof) Clears the Way for Rulings on Indemnity Obligations
LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel
[email protected]
- Claim of Diminution in Value Triggered a Defense Obligation
RYAN’S FEDERAL REPORTER
Ryan P. Maxwell
[email protected]
- Supplemental Spousal Liability Insurance Unavailable Where Insured Opted Out in Writing, Despite Insufficient Notice in Subsequent Policy
STORM’S SIU
Scott D. Storm
[email protected]
- First-Party Property Case Dismissed Due to Breach of the Two-Year Contractual Suit Limitation Condition. Time Limitation Runs From the Date on Which the Direct Physical Loss or Damage Occurred, Not the Date of the Claim Denial
FLEMING’S FINEST
Katherine A. Fleming
[email protected]
- Appraisal Proper to Determine Dollar Amount of Loss; Alleged Bad Faith Claim Handling Not an Exception to Enforceability of Appraisal Clause
GESTWICK’S GARDEN STATE GAZETTE
Evan D. Gestwick
[email protected]
- New Jersey’s High Court Finds Insurer Not Estopped From Raising Coverage Defense When Reservation of Rights Was Timely and Exclusion Was Facially Applicable
O’SHEA RIDES the CIRCUITS
Ryan P. O’Shea
[email protected]
- Insured Fails to Show Driver Was Uninsured or Underinsured Resulting in Summary Judgment in Favor of Insurer
LABARBERA’S LOWER COURT LIBRARY
Isabelle H. LaBarbera
[email protected]
- Court Finds Disclaimer Pursuant to Exclusion for Motor Vehicles Applies to Preclude Coverage Under Homeowners Policy, Finding the “Designed to Assist the Handicapped” Exclusion Inapplicable in E-Scooter Accident
LEXI’S LEGISLATIVE LOWDOWN
Lexi R. Horton
[email protected]
- Proposed Legislation to Authorize the Use of Fully Autonomous Vehicles in Albany and Rensselaer Counties Until July 1, 2028
VICTORIA’S VISION ON BAD FAITH
Victoria S. Heist
[email protected]
- SDNY Grants Motion to Amend Complaint to Clarify Bad Faith COA
SHIM’S SERIOUS INJURY SEGMENT
Stephen M. Shimshi
[email protected]
- Motion to Set Aside Jury Findings on “Permanent Consequential Limitation” and “Significant Disfigurement” Categories Denied
NEW ENGLAND ALMANACK
Barbara A. O’Donnell
Alex G. Henlin
Iryna N. Dore
- A Demand for Appraisal Over Five Years After Settlement of the Loss Is Unreasonable and Untimely as a Matter of Law
- Court Rejects Creative, but Unsupported, Arguments Concerning Alleged Breach of Contract Following Insurer’s Payment of Value of Loss Established by Appraisal
NORTH of the BORDER
Heather A. Sanderson, K.C.
Sanderson Law
Calgary, Alberta, Canada
[email protected]
- Time‑Limited Demands and Excess Risk: Lessons from Lau v. ICBC for Insurers and Defence Counsel
Next issue two weeks from now, will be our 725th issue the final issue of our 27th year of publication. Have no fear, year 28 is just around the corner.
Have a situation? Reach out.
Dan
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 and New Jersey.
In addition, Dan D. Kohane is a Foreign Legal Consultant, Permit No. 0119144, 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.
NEWSLETTER EDITOR
Dan D. Kohane
[email protected]
ASSOCIATE EDITOR
Evan D. Gestwick
[email protected]
INSURANCE COVERAGE/EXTRA CONTRACTUAL LIABILITY TEAM
Dan D. Kohane, Chair
[email protected]
Steven E. Peiper, Co-Chair
[email protected]
Michael F. Perley
Agnieszka A. Wilewicz
Lee S. Siegel
Barbara A. O’Donnell
Brian F. Mark
Scott D. Storm
Alexander G. Henlin
Iryna N. Dore
Ryan P. Maxwell
Katherine A. Fleming
Evan D. Gestwick
Ryan P. O’Shea
Isabelle H. LaBarbera
Lexi R. Horton
Victoria S. Heist
FIRE, FIRST PARTY AND SUBROGATION TEAM
Steven E. Peiper, Team Leader
[email protected]
Michael F. Perley
Scott D. Storm
NO-FAULT/UM/SUM TEAM
Jessica L. Deren
Ryan P. O’Shea
[email protected]
APPELLATE TEAM
Jody E. Briandi, Team Leader
[email protected]
Topical Index
Kohane’s Coverage Corner
Peiper on Property and Potpourri
Ryan’s Federal Reporter
Storm’s SIU
Fleming’s Finest
Gestwick’s Garden State Gazette
O’Shea Rides the Circuits
LaBarbera’s Lower Court Library
Lexi’s Legislative Lowdown
Victoria’s Vision on Bad Faith
Shim’s Serious Injury Segment
New England Almanack
North of the Border
KOHANE’S COVERAGE CORNER
Dan D. Kohane
[email protected]
05/21/26 S & M Bronx Inc. v. Diversified Planning Brokerage LLC
Appellate Division, First Department
Question of Fact Existed As Whether Insurance Broker Negligently Allowed Policies to Lapse
In this action for malpractice, plaintiffs allege that defendants' insurance brokers negligently allowed plaintiffs' liability coverage to lapse, that defendants breached their fiduciary duty to plaintiffs, and that plaintiffs detrimentally relied upon defendants' insurance expertise and knowledge.
Plaintiffs testified that, among other things, defendants advised plaintiffs regarding insurance issues, addressed plaintiffs' audits, and handled insurance policy changes. Although defendants' principal testified that the insurance carrier did not contact defendants during the audit that eventually led to plaintiffs' coverage being dropped, one of the individual plaintiffs testified that he had worked with defendants for more than a decade, used defendants for all six of his businesses, and that he would send everything in his possession relating to insurance to defendants, who would in turn take care of it, including when plaintiffs received audit requests from the insurance carrier.
In such a situation where there is a course of dealing over an extended period of time which would have put objectively reasonable insurance agents on notice that their advice was being sought and specially relied on a special relationship may arise thereby creating an additional duty of advisement even in the absence of a specific request from the insured to the broker.
There are also issues of fact concerning which party was responsible for managing the renewal. The record evidence does not disprove as a matter of law that defendants' inaction in renewing the policy did not proximately cause plaintiffs' injuries.
However, the second and third causes of action, for breach of fiduciary duty and detrimental reliance, should be dismissed as duplicative of the negligence cause of action.
05/19/26 Ward v. Northeast Truck Rental and Leasing LLC
Appellate Division, First Department
Leasing Company’s Various Attempts to Be Let Out of Lawsuit on the Basis of the Graves Amendment or Pay Money Into Court, All Failed
The lower court granted a default against Perez in an auto accident case and allowed his insurer to deposit his policy limits in the amount of $25,000 to stay the accrual of interest. The First Department vacated the default on the ground that Perez had timely made his motion within to vacate the within one year of entry of the default finding against him, that the default is excusable because Perez demonstrated his lack of willfulness or intention to abandon his defense by appearing for a deposition and plaintiff makes no showing of prejudice and made a meritorious defense by asserting that he was at a complete stop when the collision occurred. There is a strong public policy favoring resolution on the merits.
Northeast had asked the trial court to allow it to deposit its insurance limits into the court, as CPLR 2601 requires some "legal basis for taking control of the funds.” The First Department agreed with the lower court that the carrier could not. There has been no finding that Northeast is liable, and Northeast makes no other argument for its insurer's proposed deposit.
Northeast also sought to dismiss thenot.int as against it under the Graves Amendment but didn’t provide sufficient proof. Even if the Court were to consider the submitted affidavits, the documentary evidence, a lease agreement, was insufficient to satisfy Northeast's burden, because it was not signed by Perez, the purported lessee of the vehicle.
05/13/26 AIX Specialty Insurance Company v. Steel Fab NY, Inc
Appellate Division, Second Department
In a Well-Reasoned Decision, Court Finds Classification Limitation Precluded Coverage and Rules Relating to Disclaimer Letter Are Inapplicable
AIX commenced this action, inter alia, for a judgment declaring that it is not obligated to defend or indemnify any party in connection with two underlying personal injury actions The underlying actions arose from related incidents that occurred at a construction site when two employees of the defendant “Steel Fab” NY, Inc. allegedly were injured while performing steel erection work. On the date of the incidents, the defendant “ZNKO” Construction, Inc. was the general contractor on the construction project and the defendant “Sullivan” Heights, LLC was the owner of the premises. Steel Fab had been retained by ZNKO pursuant to a subcontract.
The injured employees commenced separate personal injury actions against ZNKO and Sullivan in 2017, alleging common-law negligence and violations of Labor Law §§ 200, 240(1), and 241(6). Thereafter, ZNKO and Sullivan commenced separate third-party actions against Steel Fab for contractual indemnification, common-law indemnification, and contribution/apportionment, and alleging failure to procure insurance. The underlying actions were later joined for discovery and trial.
AIX provided a CGL policy to Steel Fab that provided additional insured coverage for any person or organization for whom Steel Fab performed operations when the parties had agreed in writing that such person or organization be added as an additional insured.
AIX denied coverage to both, under a Designated Operations Exclusion and Classification Limitation Endorsement and then commenced this DJ action to confirm it denial. Mt. Hawley Insurance Company (hereinafter Mt. Hawley), the excess insurer for ZNKO and Sullivan moved for leave to intervene as a defendant and opposed the plaintiff's motion.
AIX demonstrated, prima facie, that the underlying personal injury claims fell outside the policy's scope of coverage by submitting, among other things, affidavits describing the scope of Steel Fab's work, the insurance policy and underwriting file, and a bill of particulars indicating that the injuries occurred during steel erection operations, which were not within the policy's covered risk classifications.
Contrary to the contentions of ZNKO and Sullivan under the circumstances of this case, the Supreme Court providently exercised its discretion by considering the subcontract, which was inadvertently omitted from the plaintiff's moving papers and was submitted for the first time in reply, since ZNKO and Sullivan had an opportunity to respond thereto and submitted papers in sur-reply.
Here, the policy's Classification Limitation Endorsement listed coverage for "Metal Works—shop—structural load bearing" and "Metal Works—shop—decorative or artistic." Contrary to the contentions of ZNKO and Sullivan Heights and Mt. Hawley, read as a whole, these classifications unambiguously limited the policy's coverage to claims arising from fabrication operations performed at the insured's shop and did not encompass on-site erection work. The coverage was not illusory, as there were certain claims that would fall within coverage.
This coverage limitation was not an exclusion but limited the scope of the grant of coverage. Thus, Insurance Law Section 3420(d)(2) was in applicable. A disclaimer pursuant to Insurance Law § 3420(d) is required when the denial of coverage is based upon a policy exclusion without which the claim would be covered."
An additional insured is "'an entity enjoying the same protection as the named insured'" Here because the claims in the underlying actions fell entirely outside the scope of coverage pursuant to the policy's Classification Limitation Endorsement, coverage was not available to Steel Fab, the named insured, and, thus, did not extend to ZNKO or Sullivan as additional insureds under Steel Fab's policy.
05/12/26 P.S. Marcato Elevator Co., Inc. v. Scottsdale Insurance Co.
Appellate Division, First Department
Excess Policy Over CGL Coverage Is Never Reached Because of Unlimited Employer’s Liability Coverage
Contrary to plaintiff's contention, the Construction Project endorsement in the primary Scottsdale policy, which states, "Designated Construction Projects(s): All Projects," is unambiguous. The phrase "all projects" cannot be read in isolation from the heading "Designated Construction Projects(s)," and the phrase therefore refers only to plaintiff's construction projects, not all of plaintiff's projects.
A contrary reading would render "construction" superfluous because if "all projects" encompasses every conceivable project, the qualifier "construction" adds no independent meaning or limitation (see Spaulding v Benenati, 57 NY2d 418, 425 [1982]). It would also render the $2 million general aggregate limit superfluous because the Construction Project endorsement gives "[a] separate Designated Construction Project General Aggregate Limit [that] applies to each designated construction project." Extrinsic evidence is not admissible to determine the meaning of the endorsement, as it is unambiguous on its face.
Plaintiff has not presented "clear, positive and convincing evidence" needed to show that reformation of the primary Scottsdale policy is appropriate. Reformation based on mutual mistake requires the parties to have reached an oral agreement, but the record does not show they reached one.
Even assuming an oral agreement, plaintiff's evidence reflects only certain individuals' interpretations of the policy.
Plaintiff was not entitled to indemnification based on the Cross Liability exclusion in the Scottsdale excess policy.
Moreover, plaintiff was not entitled to indemnification based on the Employer's Liability exclusion in the National Union policy. Having previously analyzed identical language, we concluded that it "unambiguously excludes" an employer from recovering against its excess insurer when the employer had a workers' compensation policy that "provided for unlimited coverage for a worker's 'grave injury'." This case presents such a circumstance.
PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper
[email protected]
Property
05/05/26 MIC Gen. Ins. Co. v. Eckart
Appellate Division, First Department
Ambiguity in the Application of “Household” and “Reside” Precludes MIC General’s Motion for Summary Judgment
MIC General challenged the trial court’s decision to vacate a default judgment that had previously been entered against defendant Eckart. On appeal, the Court confirmed that Ms. Eckart showed both a reasonable excuse for the delay and the possibility of a meritorious defense. Defendant’s meritorious defense was premised upon the argument that the terms “residence premises” and “household” are ambiguous as used in the context of this claim.
As is relevant, the policy provided coverage for a premises located at Tanners Neck Lane. In particular, coverage was provided to Ms. Eckart, and potentially her spouse, George, if both resided in the same household. It was shown that Ms. Eckhart may have lived at a separate residence. However, the Record also potentially showed that she visited the insured property and remained an owner of the dwelling thereon. Accordingly, because the policy did not define what constituted “residence” or “household” the Court found a question of fact existed on the merits of MIC General’s denial under the circumstances of this case.
Potpourri
05/07/26 AIG Prop. Cas. Co. a/s/o Schwartz v. High Line Construction
Appellate Division, First Department
Dispositive Findings on Negligence (and Lack Thereof) Clears the Way for Rulings on Indemnity Obligations
Schwartz sustained a significant water loss when the on-site sprinkler system discharged. After paying the loss, AIG commenced a subrogation action against High Line Construction. High Line, in turn, commenced a third-party action against Sammy’s Interior Painting. Sammy’s was eventually added as a party defendant, and all parties eventually moved for summary judgment.
As an initial matter, Sammy’s Interior Painting moved for summary judgment seeking dismissal of all claims commenced by plaintiff, AIG, against it. Sammy’s argued that it was not in privity of contract with AIG’s insured, and, as such, owed no duty of care to it. That motion was denied where it was shown that Sammy’s was the only contractor working near the sprinkler system when it discharged. And, further testimony appeared to suggest that Sammy’s employees were using knives that could have caused the system to discharge if they came into contact with sprinkler component parts. Accordingly, a question of fact existed as to whether Sammy’s employees launched an instrument of harm which resulted in the loss.
AIG was granted summary judgment against High Line for indemnity purposes because the contract governing High Line’s work at the project extended indemnity obligations to “the Work…or (iii) the negligent or willful acts of High Line or its subcontractors.” Because the clause applies broadly to work performed at the premises and is not tied to an allocation of High Line’s own negligence, the Court ruled that AIG, as subrogee of Schwarz, was entitled to a conditional indemnity order. This was the case even though there was no indication that High Line, itself, was actively negligent.
Further, pursuant to the High Line/Sammy’s contract, High Line was also entitled to conditional summary judgment on its own motion for contractual indemnification. The Court ruled that High Line was not negligent in any fashion, and, as such, was entitled to pass its exposure, if any, to Sammy’s. This was the case even though the language of the contract does contemplate High Line being indemnified for its own negligence.
LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel
[email protected]
05/12/26 Amica Mut. Ins. Co. v. Gilleran
Appellate Court of Connecticut
Claim of Diminution in Value Triggered a Defense Obligation
The Appellate Court affirmed the trial court’s ruling that Amica must defend its auto insured for an allegation of diminution of value. Although the first-party coverage contained an exclusion for such claims, there was no comparable exclusion under the liability coverage.
Gilleran negligently damaged Jasmin’s new BWM 430i, causing extensive repairs. Jasmin sued Gilleran for diminution in value, loss of use, lost time, inconvenience, and loss of life’s enjoyment. Amica did not like these claims and commenced this DJ action seeking a ruling that they were outside of coverage.
The court, noting that under established precedent, motor vehicle damages may include costs related to diminution in value, held that such claims triggered coverage as a partial destruction. Amica argued that the policy defined "property damage" as "physical injury to, destruction of or loss of use of tangible property," but the court pointed out that it does not define the term "destruction."
Because at least one allegation of the complaint possibly fell within coverage, Amica was obligated to defend Gilleran.
RYAN’S FEDERAL REPORTER
Ryan P. Maxwell
[email protected]
05/20/26 State Farm Mutual Automobile Ins. Co. v. Ricciardi
United States Court of Appeals, Second Circuit
Supplemental Spousal Liability Insurance Unavailable Where Insured Opted Out in Writing, Despite Insufficient Notice in Subsequent Policy
State Farm issued Daniel Ricciardi an auto policy that was effective from March 23, 2023, to September 23, 2023 (the “Original Policy”). The Original Policy did not include Supplemental Spousal Liability Insurance (“SSL insurance”), which might cover bodily injury to the insured’s spouse where the spouse’s recovery turns on the insured’s culpability.
At the time the Original Policy was issued, New York Ins. Law §3420(g) did not include SSL insurance by default, but required that it be offered for purchase. However, §3420(g) was amended for policies issued, renewed, or modified on or after August 1, 2023, requiring SSL insurance by default, but permitting insureds to opt out of such coverage in writing. Any such opt out applied for each renewal or amendment of the policy thereafter, without need for another written opt out by the insured.
On June 26, 2023, while the Original Policy was in effect and before the effective date of the statutory amendment, Daniel Ricciardi signed a Supplemental Spousal Liability Insurance Declination form that State Farm sent to him. “This Declination form described SSL insurance, noted that the additional monthly premium for this coverage would be ‘$15.6,’ and stated (prematurely) that New York mandated SSL insurance in auto policies unless the insured opted out in writing.” Thereafter, after totaling his 2023 BMW insured under the Original Policy, Daniel Ricciardi obtained an amended policy for his 2024 BMW, which applied from September 20, 2023, to March 23, 2024 (the “Amended Policy”). This Amended Policy did not include SSL insurance, but contained the required disclaimer that described SSL insurance, noted that this coverage is required unless the insured opts out, and informed the insured the policy did not include SSL insurance, because he had previously opted out. The notice did not include the premium for SSL insurance, as is required by New York Ins. Law §3420(g).
During the effective period of the Amended Policy, Daniel Ricciardi struck his wife Margaret with his 2024 BMW and Margaret filed suit against him for her injuries. State Farm defended Daniel, but reserved its rights to deny coverage and this action ensued. Following motion practice, the District Court determined that the insured’s June 26, 2023, declination of SSL insurance was valid, such that State Farm was without any coverage obligations for the interspousal lawsuit. The District Court found that “ State Farm’s failure to list the premium for SSL insurance in the Amended Policy did not render ineffective the June 26, 2023 Declination.”
Although the June 2023 declination of SSL insurance predated the effective date of the statutory amendments, the Second Circuit agreed that it was a valid declination for purposes of the Amended Policy, as it “ tracked the language of the New York Department of Finance model declination form that the Ricciardis themselves say applied at the time,” explaining what SSL insurance is, that it is included by default unless opted out in writing, identified the premium for SSL insurance if not declined, and recommended consultation with his insurance representative if he was unsure about declining the coverage. There was no restriction within the statute that required a declination to post-date the August 1, 2023, effective date of the amendments, and the statutes implementing regulation, 11 NYCRR § 60-1.6, “expressly provided that a prior written declination of SSL insurance would remain effective upon renewal or amendment of the underlying policy.”
However, the Amended Policy did not provide complete notice about SSL insurance as required under §3420(g). While “the Policy did note that SSL insurance was mandatory unless declined by the insured and explained the nature of this coverage, it did not list the associated premium,” rendering the Amended Policy noncompliant. State Farm conceded this point, but argued that “ the failure to list the premium for SSL insurance in the Amended Policy was immaterial because the June 26, 2023 Declination contained this information.” The Second Circuit disagreed, noting that the detailed requirements of §3420(g) “ are not satisfied by pre-renewal notice through alternative means.”
Despite this errant notice, the Second Circuit
“predict[ed] that on these facts the New York Court of Appeals would not endorse equitable reformation of the Amended Policy to include SSL coverage that Daniel expressly declined, and for which he did not pay a premium, in order to remedy State Farm’s failure to strictly comply with all of the requirements of the SSL notice in connection with the Amended Policy. Here, the only information missing from the notice accompanying the September 2023 amended policy—the SSL premium—was listed in the declination form Daniel signed in June 2023.”
The fact remained that “ Daniel never paid SSL insurance premiums, meaning that he obtained the services that he paid for and would receive a windfall if SSL insurance were ex-post read into his policy.
STORM’S SIU
Scott D. Storm
[email protected]
05/04/26 Interstate Invs., LLC v. Mt. Hawley Ins. Co.
United States District Court, Southern District of New York
First-Party Property Case Dismissed Due to Breach of the Two-Year Contractual Suit Limitation Condition. Time Limitation Runs From the Date on Which the Direct Physical Loss or Damage Occurred, Not the Date of the Claim Denial
Interstate Investments, LLC held an insurance policy with Mt. Hawley Insurance Company covering properties in Oklahoma for storm-related damage from January 21, 2023, to January 21, 2024. The policy included two key provisions:
- Choice-of-Law Clause: All matters arising out of or relating to the policy would be governed by New York law and practice, excluding New York's conflict of law rules.
- Suit Limitations Provision: Any legal action against Mt. Hawley under the policy must be brought within two years after the date of the direct physical loss or damage.
On or before June 27, 2023, a wind, hail, and rainstorm caused significant damage to Interstate's properties. Interstate filed a claim, which Mt. Hawley partially denied on August 10, 2023. Dissatisfied with the payment, Interstate engaged in unsuccessful negotiations with Mt. Hawley. Interstate filed suit on August 8, 2025, in New York Supreme Court, seeking declaratory judgment invalidating the policy's choice-of-law and limitations provisions; breach-of-contract and tortious bad faith claims under Oklahoma law; alternatively, breach-of-contract and implied covenant claims under New York law. Mt. Hawley moved for judgment on the pleadings, arguing that all claims were time-barred by the policy's two-year limitations period.
Key Legal Issues include whether the two-year suit limitations provision in the insurance policy barred Interstate's claims; and whether the limitations period began on the date of loss (June 27, 2023) or the date of claim denial (August 10, 2023), considering the policy's choice-of-law clause.
Mt. Hawley asserted that the policy required any action to be brought within two years of the date of loss, making the deadline June 27, 2025. Since Interstate filed suit on August 8, 2025, the claims were untimely. Interstate contended that under New York law, a breach of contract claim accrues at the time of breach (i.e., the denial of the claim on August 10, 2023), so the limitations period should run from that date.
The Policy contains a two-year suit limitations provision, which states that "[n]o one may bring a legal action against [Mt. Hawley] under this Policy unless ... [t]he action is brought within 2 years after the date on which the direct physical loss or damage occurred."
The court held that, although New York law generally provides that a breach of contract claim accrues at the time of breach, parties to an insurance contract may agree to a different accrual date. The policy’s explicit language required actions to be brought within two years of the date of loss, not the date of denial. The court cited precedent upholding such limitations provisions and found no reason not to enforce the policy as written. Interstate did not dispute the date of loss or provide a valid reason to disregard the contractual limitations period.
The court granted Mt. Hawley’s motion for judgment on the pleadings. All of Interstate’s claims were dismissed with prejudice as time-barred under the policy’s two-year limitations provision.
FLEMING’S FINEST
Katherine A. Fleming
[email protected]
05/08/26 In re ACE American Insurance Company
Supreme Court of Texas
Appraisal Proper to Determine Dollar Amount of Loss; Alleged Bad Faith Claim Handling Not an Exception to Enforceability of Appraisal Clause
The insured owned, leased, and managed commercial properties nationwide, including the subject warehouse. The warehouse sustained damage when the water line in its fire suppression system ruptured. The insured notified its insurers pursuant to its commercial property policies, collectively referred to as the policy, and the insurers retained an independent adjuster to investigate. The policy contained an appraisal provision authorizing either party to make a written demand for appraisal in the event that the parties disagreed on the amount of loss. The insurers invoked their right of appraisal under the policy because the parties were at an impasse regarding the remaining scope of damage and costs related to the claim. The insured refused to participate, asserting appraisal was premature and unwarranted.
The insurers filed suit and moved to compel appraisal to determine the amount of loss. The insured counterclaimed for breach of contract, Insurance Code violations, bad faith, and a declaratory judgment. The insured argued the parties disagreed about coverage issues, causation, and whether there was any damage as opposed to the dollar amount. Further, the insured argued that the insurers engaged in a pattern of bad faith in the adjustment process, excusing the insured from its obligation to comply with the policy’s appraisal condition. The trial court denied the motion to compel appraisal. The insurers filed a petition for writ of mandamus in the court of appeals, which denied relief.
The Texas Supreme Court held that the parties’ dispute was at least in part about the amount of loss and that potential coverage disputes do not defeat a contractual right to appraisal. There was no argument that the claimed damage was caused by anything other than the water main rupture, which was a covered peril. Instead, the insurers argued the insured spent more than necessary to return the warehouse to its pre-flood condition and to replace damaged property. As for the insured’s claim that the insurer had breached the insurance contract by failing to adjust the claim in good faith, by not paying the amount owed, and by asserting unfounded coverage defenses; the court held that an insurer’s alleged bad faith in handling a claim does not constitute an exception to the general enforceability of an appraisal clause. Accordingly, the Texas Supreme Court concluded that the trial court had clearly abused its discretion in denying appraisal and that the insurers lacked an adequate remedy by appeal. The Court granted the insurers’ petition for writ of mandamus and directed the trial court to grant the insurers’ motion to compel appraisal.
GESTWICK’S GARDEN STATE GAZETTE
Evan D. Gestwick
[email protected]
05/11/26 Mist Pharms., LLC v. Berkley Ins. Co.
Supreme Court of New Jersey
New Jersey’s High Court Finds Insurer Not Estopped From Raising Coverage Defense When Reservation of Rights Was Timely and Exclusion Was Facially Applicable
You may recall our write-up of this one from our February 28, 2025, newsletter, where we said that the Appellate Division held this way, and that the Supreme Court granted review. That edition can be located here.
Well, the time has come, and this past week, the Supreme Court has affirmed the order of the Appellate Division. In a 5-2 decision, the Supreme Court found that Berkley timely and appropriately reserved its right to deny coverage to Mist Pharmaceuticals and Mr. Krivulka for his alleged self-dealing while acting in his capacity as the director or officer of another company.
By way of background, this declaratory judgment action arose out of two underlying actions in which it was alleged that Joseph Krivulka, Chair of the Mist Pharmaceuticals Board of Directors, engaged in self-dealing by diverting assets belonging to another company which he also controlled to other entities, including Mist. Allegedly, Krivulka established several “paper entities,” Mist being one of them, for the purpose of diverting income and resources from Akrimax. Krivulka was simultaneously a director of both companies; however, it was undisputed that his diversion of Akrimax assets would have been done within his duties as an officer or director of Akrimax, rather than Mist.
Berkley issued a Directors and Officers insurance policy to Mist. It was undisputed that Krivulka was an insured under the policy in his capacity as Chair of the Mist Board of Directors. However, the policy contained the following “capacity exclusion:”
[i]n addition to the Exclusions listed in section IV. of the Common Policy Terms and Conditions Section of this Policy, the Insurer shall not be liable to make any payment for Loss in connection with a Claim made against any Insured:
***
G. based upon, arising out of, directly or indirectly resulting from or in consequence of, or in any way involving any Wrongful Act of an Insured Person serving in their capacity as director, officer, trustee, employee, member or governor of any other entity other than an Insured Entity or an Outside Entity, or by reason of their status as director, officer, trustee, employee, member or governor of such other entity[.]
***
When Mist was sued, it requested coverage from Berkley. The same day, Berkley responded to Mist, stating that it was reserving “all rights under the policy, at law, and in equity, including but not limited to the right to raise policy terms and conditions as defenses to coverage as may be appropriate in light of additional information received by [Berkley].” Berkley also advised Mist that, pursuant to the policy’s capacity exclusion, there would be no coverage for Krivulka for the allegations pertaining to his roles with any other company, and reserved Berkley’s right to disclaim coverage under this exclusion. Subject to this reservation of rights, Berkley agreed to reimburse Mist for 10% of all legal fees already incurred by Mist, and to pay 10% of all future legal fees incurred by Mist going forward.
Three months after the first letter, Berkley updated Mist as to its coverage analysis, by again explaining that none of the other defendants in the underlying actions were subsidiaries or affiliates of Mist, and that any coverage available to Krivulka would be limited to breaches of duty, neglect, error, or omission in his capacity as the chairman of Mist. One year and three months after that letter was sent, Berkley sent another letter to mist, this time explaining that the allegations in the underlying actions were known to Mist no later than 2013 (before the Berkley policy period), and that no claim was submitted then. In that letter, Berkley again reserved its right to deny coverage based on the capacity exclusion.
A few weeks after raising its argument as to the existence of a wrongful act prior to the policy period, Berkley again wrote to Mist, this time informing it that Berkley would be withdrawing its participation in Mist’s defense and would not be participating in the scheduled mediation.
Eventually, Mist brought the declaratory judgment action, arguing that Berkley was estopped from denying coverage, on the grounds that it initially decided to provide at least partial coverage, and that it waited too long to apprise Mist of its no coverage position. Berkley responded that the capacity exclusion barred coverage for Krivulka, and that it was not estopped from taking this position as it timely reserved its right to do so from the outset of the insurance claim.
The Supreme Court began its analysis by examining whether the capacity exclusion applied to the underlying allegations. The Supreme Court noted that the word “or,” as used in the capacity exclusion, was disjunctive, meaning that each term in the exclusion alone was sufficient to bar coverage. The Court also noted that, unlike other exclusions, the capacity exclusion required no causal nexus between the excluded activities and the harm alleged; instead, all that is required for the capacity exclusion to apply is that the allegations “in any way” involved a wrongful act of an insured while serving in their capacity as the director, officer, trustee, employee, member, or governor of an entity other than the insured entity.
Because Akrimax was not an insured entity, and because the underlying actions uniformly alleged that Krivulka caused the loss while acting in the scope as an officer of that company, the Supreme Court held that the exclusion applied to the loss.
The Supreme Court then turned to Mist’s estoppel arguments to determine whether Zurich had the right to rely upon the capacity exclusion. In support of its arguments, Mist argued that Zurich simply waited too long to raise the exclusion and finally did so only after it had provided Mist with at least a partial defense for a substantial period of time. Berkley responded that it repeatedly reserved its right to rely on the capacity exclusion from the outset of the claim.
The Supreme Court began this analysis by noting the various ways in which an insurer may become estopped from denying coverage: (1) the insurer refuses to settle in bad faith; (2) unreasonable delay in claim handling and/or failure to properly reserve the right to later deny coverage based on a specific policy provision; or (3) failure to inform the insured of their right to accept or reject an offered courtesy defense. Here, Mist’s main estoppel argument lied with the fact that Berkley waited over a year to convert its reservation of rights into a full coverage denial and did so at a time when mediation was already scheduled, and when Berkley had been paying a portion of Mist’s defense costs the entire time.
Here, the Supreme Court noted that, under well-established New Jersey jurisprudence, reservation of rights letters has long been regarded as proper defense mechanisms for insurance companies. Indeed, under New Jersey law, by reserving rights and providing defense costs as to potentially covered claims, insurers fulfill their defense obligations, and a good-faith challenge to coverage is not a breach of an obligation to defend.
Because Berkley properly and timely reserved its right to deny coverage on the capacity exclusion from the time Berkley was notified of the claim, and because the capacity exclusion applied to the totality of the underlying claims made against Mist, the Supreme Court affirmed the holding of the Appellate Division, which held that Berkley owed no coverage to Mist.
Editor’s Note: Had this been a New York claim, the result would have been the same, despite New York’s drastically different rules regarding disclaimer letters. Under New York Insurance Law 3420(d)(2), insurers are required to give notice of their decision to deny coverage as soon as possible—generally understood to mean within 30 days. New York courts, unlike most other jurisdictions (New Jersey included) have long held that reservation of rights letters (as opposed to true disclaimer letters) are insufficient to meet this requirement. But, that New York rule only applies to claims of death or bodily injury—not to claims of self-dealing, like in this case.
O’SHEA RIDES the CIRCUITS
Ryan P. O’Shea
[email protected]
05/18/26 Hill v. GEICO Gen. Ins. Co.
United States Court of Appeals, Fifth Circuit
Insured Fails to Show Driver Was Uninsured or Underinsured Resulting in Summary Judgment in Favor of Insurer
Hill alleged she sustained injuries in a two-car collision. The alleged tortfeasor, Sarimento, operated a car owned by Lopez. Hill alleged Lopes possessed insurance that listed Sarimento as a permitted driver. Hill recovered the policy limit of Lopez’s policy but claimed the amount was insufficient to compensate her injuries. So, Hill sued GEICO who insured Hill for uninsured/underinsured motorists (“UM/UIM”) coverage.
GEICO successfully moved for summary judgment at the District Court level. GEICO argued that under Louisiana law, an insured seeking recovery for UM/UIM benefits must prove that both the owner and the driver of the at fault vehicle were uninsured or underinsured.
On appeal, Hill contested that the declarations page of Lopez’s policy listed Sarimento as a permitted driver. Yet Sarimento was not listed as a Named Insured on Lopez’s policy. Further, Hill offered no insight as to whether Sarimento possessed his own insurance policy. Thus, declarations page alone was insufficient to rebut GEICO’s coverage position.
Hill also asserted that the police report stated that Sarimento lacked a license at the time of the loss and was from Honduras. Hill believed these facts could raise an inference that Sarimento was uninsured. However, Hill did not raise this argument at the District Court level. Notwithstanding this issue, the Court of Appeals reasoned that even considering the police report, Hill submitted no evidence that Sarimento’s lack of a licenses or Honduran nationality barred him possessing an insurance policy.
As Hill failed to show that Sarimento was uninsured or underinsured or at least created an issue fact, the District Court’s decision was affirmed.
LABARBERA’S LOWER COURT LIBRARY
Isabelle H. LaBarbera
[email protected]
04/30/26 Adirondack Insurance Exchange v. Alan Wang, et al
Supreme Court, New York County
Court Finds Disclaimer Pursuant to Exclusion for Motor Vehicles Applies to Preclude Coverage Under Homeowners Policy, Finding the “Designed to Assist the Handicapped” Exclusion Inapplicable in E-Scooter Accident
Adirondack Insurance Exchange (“Adirondack”) issued a homeowners insurance policy to Alan and Wendy Wang. During the policy period, Alan Wang was involved in a collision with a cyclist on the Brooklyn Greenway bike path, while Mr. Wang was riding an E-scooter.
The cyclist (the “Claimant”) brought an action against the Wangs, and the City of New York. Four days after receiving notice of the incident, Adirondack sent a letter to the Wangs, disclaiming coverage but agreeing to provide a courtesy defense. Adirondack subsequently brought a declaratory judgment action seeking a declaration that no coverage exists related to the collision, pursuant to the motor vehicle liability exclusion in the policy.
Adirondack moved for summary judgment. Relying primarily on the language in the policy, which precluded coverage for motor vehicle liability. Motor vehicle, was defined in the policy as “a self-propelled land or amphibious vehicle.”
In opposition, the insureds alleged that the exclusion was ambiguous, because Vehicle & Traffic Law was amended to exclude E-scooters from the definition of “motor vehicle.” In addition, the insureds alleged that the exception to the exclusion, for motor vehicles “designed to assist the handicapped” applied to restores coverage. To support this claim, the insureds submitted deposition testimony of Mr. Wang, identifying that he suffers from functional deafness. Lastly, the insureds argued that the disclaimer issued by Adirondack violated Insurance Law 3420, arguing it did not sufficiently place the insured on notice that the exclusion was applicable.
The Court looked toward the basic principles of contract interpretation, to find that the language within the applicable exclusion was clear and unambiguous. The Court found that there was no question of fact that the scooter involved in the collision was a self-propelled electric scooter, and thus unambiguously qualifies as a “motor vehicle” based on the definition in the policy. Importantly, the Court noted that the VTL’s amended definition of “motor vehicle” did not render the term ambiguous as the policy itself defined the term.
In looking at the exception to the motor vehicle exclusion, the Court found that the insureds evidence was insufficient to raise a triable issue of fact. While the evidence of deposition testimony may show that the scooter was being used to assist a handicap person, it did not give rise to a dispute as to whether the scooter was designed to assist the handicapped – a requirement of the policy.
Lastly, as to the timeliness of the disclaimer, the Court found that Adirondack satisfied the specificity requirements of Insurance Law Section 3420. The Court noted that the letter quotes the exclusion and describes the facts which make the exclusion applicable. As such, the Court found the disclaimer valid.
Accordingly, the Court granted Adirondack’s motion in its entirety, finding that Adirondack owed no coverage, defend, or indemnification to the insureds in relation to the E-scooter accident. As such, the Court declared that Adirondack may withdraw from the defense of the insureds.
Editor’s Note: A copy of this decision is available upon request.
LEXI’S LEGISLATIVE LOWDOWN
Lexi R. Horton
[email protected]
05/06/26 New York Senate Bill 2025-S10473
Proposed Legislation to Authorize the Use of Fully Autonomous Vehicles in Albany and Rensselaer Counties Until July 1, 2028
Bill 2025-S10473 seeks to create a pilot program for the use of autonomous vehicles in Albany and Rensselaer counties.
The bill would also provide that all autonomous vehicles must obey all traffic and motor vehicle laws and operations. Further, the bill outlines all requirements surrounding licensing, insurance, duties to follow in crashes, on-demand autonomous vehicle networks, registration and title, controlling authority, and operation of an autonomous vehicle by a human driver.
Vehicle and traffic law would be amended to include sections to define equipment requirements and inspection criteria for autonomous vehicles.
The justification provides that this would offer another option for transportation in the Albany and Rensselaer counties.
VICTORIA’S VISION ON BAD FAITH
Victoria S. Heist
[email protected]
05/01/26 Renergy, Inc v. Mt. Hawley Ins. Co.
United States District Court, Southern District of New York
SDNY Grants Motion to Amend Complaint to Clarify Bad Faith COA
Mt. Hawley Insurance Co. ("Mt Hawley") issued a Site-Specific Environmental Liability Insurance Policy to Renergy, Inc. ("Renergy") that covers sums Renergy is obligated to pay for Corrective Action Costs caused by a pollution incident.
After the 2022 release of a pollutant, Renergy submitted a claim to Mt. Hawley for approximately $1,500,000 in coverage under the policy. Mt. Hawley retained a third-party consultant to review Renergy's invoices.
Renergy subsequently commenced this action against Mt. Hawley for breach of contract and bad faith. Renergy alleges Mt. Hawley adopted its third-party consultant's findings without independent analysis, issued duplicative document requests, and denied coverage, only paying about $250,000 of the claim.
In this case, Renergy filed a motion to amend its complaint, to withdraw a declaratory judgment claim and clarify the allegations supporting the bad faith cause of action. Mt. Hawley opposed Renergy's motion, arguing Renergy's amendment to clarify bad faith claims should be denied because New York does not recognize bad faith claims for third-party liability policies, the bad faith claim is duplicative of the breach of contract claim, and Plaintiff fails to plausibly plead the necessary elements required for consequential damages.
The Court granted Renergy's motion to amend its complaint, finding that New York bad faith claims are narrowly recognized, but they are not restricted to only first-party coverage. The Court also found Renergy's bad faith claim not duplicative of the breach of contract claim because the bad faith claim pertains to Mt. Hawley's handling of the claim instead of a pure denial of insurance coverage. Finally, the Court found Renergy adequately plead consequential damages because Renergy alleged "specific alleged downstream damages" which is sufficient to establish consequential damages were foreseeable.
SHIM’S SERIOUS INJURY SEGMENT
Stephen M. Shimshi
[email protected]
05/06/26 Hichak v. Grand Plumbing, Inc.
Appellate Division, Second Department
Motion to Set Aside Jury Findings on “Permanent Consequential Limitation” and “Significant Disfigurement” Categories Denied
On December 17, 2018, plaintiff’s vehicle was struck in the rear by a motor vehicle owned by Defendant Grand Plumbing Inc. ("Grand") and operated by Defendant Jose Orellana-Lainez ("Jose"). Thereafter, plaintiff commenced this action against the defendants seeking recovery for personal injuries she allegedly sustained as a result of the subject accident.
At a trial, the plaintiff introduced evidence that the subject accident exacerbated a preexisting asymptomatic degenerative osteophyte disc condition to her cervical spine, and that the exacerbation required her to undergo a two-level discectomy and posterior decompression fusion and stabilization surgery. The jury returned a verdict finding that the plaintiff sustained a serious injury under the “significant limitation of use of a body function or system” category of Insurance Law § 5102(d) as a result of the accident. However, the jury found that plaintiff’s injuries did not fall under the “permanent consequential limitation of use of a body organ or member” or “significant disfigurement” categories of Insurance Law § 5102(d).
Pursuant to CPLR § 4404(a), plaintiff moved to set aside, as contrary to the weight of the evidence, the jury verdict as it found that plaintiff did not sustain a serious injury under the “permanent consequential limitation of use of a body organ or member” category of Insurance Law § 5102(d) as a result of the subject accident, and to set aside, as contrary to the weight of the evidence and inadequate, so much of the jury verdict award.
Pursuant to an Order dated February 28, 2024, the Supreme Court granted the foregoing portions of the plaintiff's motion. Additionally, the court, sua sponte, set aside, as contrary to the weight of the evidence, so much of the jury verdict as found that the plaintiff did not sustain a serious injury under the “significant disfigurement” category of Insurance Law § 5102(d) as a result of the accident, and directed a new trial on that issue. Defendants appeal.
On appeal, the Appellate Division, Second Department, determined that the Supreme Court erred in setting aside so much of the jury verdict as found that the plaintiff did not sustain a serious injury under either the “permanent consequential limitation of use of a body organ or member” or “significant disfigurement” categories of Insurance Law § 5102(d) as a result of the accident and in directing a new trial on those issues. "'[A] jury's finding that the plaintiff sustained an injury within any of the categories set forth in Insurance Law § 5102(d) satisfies the no-fault threshold, thereby eliminating that issue from the case and permitting the plaintiff to recover any damages proximately caused by the accident'" (Kapassakis v Metropolitan Transp. Auth., 193 AD3d 835, 837, 147 N.Y.S.3d 87, quoting Kelley v Balasco, 226 AD2d 880, 880, 640 N.Y.S.2d 652; see Usoiani v Dumbo Moving & Stor., Inc., 241 AD3d 981, 241 N.Y.S.3d 398). The Court held that the jury’s verdict finding that the plaintiff sustained a serious injury under the “significant limitation of use of a body function or system” category of Insurance Law § 5102(d) as a result of the subject accident “eliminated the issue of whether the plaintiff sustained a serious injury from the case, thereby entitling the plaintiff to recover for all injuries she incurred as a result of the accident” (see Usoiani v Dumbo Moving & Stor., Inc., 241 AD3d 981, 241 N.Y.S.3d 398; Kapassakis v Metropolitan Transp. Auth., 193 AD3d 835, 147 N.Y.S.3d 87).“A jury verdict on the issue of damages may be set aside as contrary to the weight of the evidence only if the evidence on that issue so preponderated in favor of the movant that the jury could not have reached its determination on any fair interpretation of the evidence” (Carter v City of New Rochelle, 208 AD3d 843, 845, 173 N.Y.S.3d 662; see Lolik v Big V Supermarkets, 86 NY2d 744, 746, 655 N.E.2d 163, 631 N.Y.S.2d 122; Hannays v Miskiewicz, 240 AD3d 582, 583, 236 N.Y.S.3d 733). Although “[t]he amount of damages to be awarded for personal injuries is a question for the jury, and the jury's determination is entitled to great deference” (Usoiani v Dumbo Moving & Stor., Inc., 241 AD3d at 985), “a jury award may be set aside if it deviates materially from what would be reasonable compensation” (Carter v City of New Rochelle, 208 AD3d at 845).
The Appellate Division, Second Department, held that the jury’s award of $15,000 for past pain and suffering, past medical expenses, and future medical expenses could not be reconciled with its own finding that the plaintiff sustained a serious injury under the “significant limitation of use of a body function or system” category of Insurance Law § 5102(d) as a result of the accident, and was inadequate (see Carter v City of New Rochelle, 208 AD3d at 845; Kapassakis v Metropolitan Transp. Auth., 193 AD3d 835, 147 N.Y.S.3d 87; Robles v Polytemp, Inc., 127 AD3d 1052, 1055, 7 N.Y.S.3d 441).
By finding that the plaintiff sustained a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident, “the jury implicitly rejected the defendants' position that the injuries to the plaintiff's cervical spine were not causally related to or exacerbated by the accident” (see Kapassakis v Metropolitan Transp. Auth., 193 AD3d 835, 147 N.Y.S.3d 87; Hadjidemetriou v Juarez, 187 AD3d 1156, 131 N.Y.S.3d 237).
Based on the foregoing, the Appellate Division, Second Department, denied the motion to set aside jury findings on “permanent consequential limitation” and “significant disfigurement” categories, deleting the sua sponte order for new trial on “significant disfigurement,” affirming the grant of new trial on damages, and awarding one bill of costs to plaintiff.
NEW ENGLAND ALMANACK
Barbara A. O’Donnell
[email protected]
Alexander G. Henlin
[email protected]
Iryna N. Dore
[email protected]
05/12/26 New England Prop. Servs. Grp., LLC v. Selective Ins. Co. of S.C.
United States District Court, Rhode Island
A Demand for Appraisal Over Five Years After Settlement of the Loss Is Unreasonable and Untimely as a Matter of Law
Property owners reported damage sustained by the property to the carrier on October 29, 2017. While there was an initial dispute over the loss amount, on January 16, 2019, the property owners executed and delivered a "Statement of Loss" identifying the “total loss” and “total recoverable depreciation.” The following day, the carrier confirmed an agreed upon loss amount. The carrier paid the agreed-upon amount, including depreciation, on June 3, 2019.
More than five years later, on February 22, 2025, the owners executed an Assignment that conveyed their rights in the claim to a third-party. Two days thereafter, the third party informed the carrier that it disagreed with the agreed-upon loss amount and demanded an appraisal. The carrier disclaimed its obligation to participate in the appraisal based upon the agreement reached with the owners concerning the loss amount and the elapse of time. The third party, in turn, sought a Court Order directing the carrier to participate in the appraisal.
The Court denied the request. First, the Court noted that the Policy only requires appraisal if there is a disagreement as to the amount of loss between the parties. The third party could not satisfy this requirement because of the final and enforceable agreement between the owners and the carrier concerning the loss amount. In light of the agreement, the third party did not have any right to invoke the Policy’s appraisal provisions.
Second, the Court held that “plain, blunt fact” of a delay of more than five and a half years from the carrier’s issuance of its final payment for the agreed-upon loss amount is palpably unreasonable and, as a matter of law, relieves the carrier of any duty it might have to proceed with an appraisal.
As a result, the third party’s request for an Order compelling appraisal was denied as a matter of law.
04/20/26 Mullowney v. USAA Cas. Ins. Co.
United States District Court, Rhode Island
Court Rejects Creative, but Unsupported, Arguments Concerning Alleged Breach of Contract Following Insurer’s Payment of Value of Loss Established by Appraisal
The carrier disagreed with the value of the property loss asserted by the insured and paid the undisputed amount only. After an appraisal demanded by the insured, the carrier paid the difference between the undisputed and awarded amounts, while retaining depreciation payments pending verification of the property’s restoration. The insured sued for breach of contract.
The insured initially argued that the carrier breached the policy by failing to pay the value of the loss prior to the appraisal. The Court found the argument unpersuasive because it could not locate any authority (none was identified by the insured) supporting the proposition that a payment delay, pending appraisal, might constitute a breach of contract.
The insured next argued that the carrier breached the policy by failing to conduct a complete and adequate evaluation of the loss during the appraisal. The Court held that the insured failed to provide any authority for the contention that the appraisal, by itself, violated the policy where the insured was represented during the appraisal and his representative agreed with the loss value established by the panel.
Finally, the insured argued that the carrier breached the covenant of good faith and fair dealing by failing to pay the loss in a timely manner. The Court reiterated Rhode Island’s law that requires litigants seeking recovery under a bad faith theory to first establish a breach of contract. Finding no breach of contract, the Court dismissed the claim for violating the covenant of good faith and fair dealing.
NORTH of the BORDER
Heather A. Sanderson, K.C.
Sanderson Law
Calgary, Alberta, Canada
[email protected]
The content of this column also appears in the “Liability & Insurance,” a monthly newsletter focusing on Canadian coverage and published by Heather Sanderson. Contact her for a subscription.
04/01/26 Lau v. Insurance Corporation of British Columbia
British Columbia Supreme Court (trial level)
Time‑Limited Demands and Excess Risk: Lessons From Lau v. ICBC for Insurers and Defence Counsel
Why This Case Matters
The April 1, 2026, decision of the British Columbia Supreme Court in Lau v. Insurance Corporation of British Columbia, addresses insurer and defence counsel duties when a claimant makes an early, time‑limited, policy‑limits offer. It is also novel as it awards “loss of chance” damages flowing from a missed settlement opportunity even where there is an absence of evidence that on a balance of probabilities, settlement could have been achieved. Finally, for insurers and defence counsel, the judgment deprecates on a “wait and see” strategy; underscores the need to investigate and be settlement‑ready when an offer within limits arrives regarding a claim with severe over-limits potential, and shows that independent/excess counsel can face liability where they fail to provide accurate, timely advice to the insured and concurrently, take action where it is evident that the insurer is giving priority its own interests over those of the insured.
The Collision
On a dark and rainy Thursday night in January of 2015, Seng Dick Lau inadvertently drove his SUV through a red light in Vancouver. In doing so, he struck 62-year-old Dennis Cole, who was riding an e-bike. Cole suffered a catastrophic, frontal lobe brain injury, resulting in permanent blindness and right-sided paralysis. He remained in a coma for weeks, followed by many months in a brain injury rehabilitation hospital requiring daily nursing care. Although he improved with time, he required a committee to manage his affairs as he was permanently and severely, cognitively impaired.
At the time of his injury, Cole was employed by the Legal Education Society of British Columbia as the Director of Finance and Administration. He was earning approximately $200,000 per annum.
On the date of the collision, Lau carried $2,000,000 third‑party auto liability coverage under a standard British Columbia auto policy issued by the Insurance Corporation of British Columbia (ICBC). The judgment does not discuss Lau’s net worth at the time of the collision, or as the claim unfolded, but the judgment does say that he had title to a house and had other assets.
Counsel Lineup
Cole, through his litigation guardian, retained Michael Slater, K.C. Slater is an experienced Vancouver-based practitioner whose practice is primarily focused on severe traumatic brain injuries and spinal cord injuries.
ICBC appointed Mary‑Helen Wright to defend Lau under the policy’s exclusive‑conduct clause. Wright has over 40 years of experience defending insurance claims and holds several awards attesting to her reputation, knowledge, and experience, including the Lee Samis Award of Excellence awarded by Canadian Defence Lawyers.
In August 2015, Lau retained Andrew Epstein as his excess counsel. Also based in Vancouver, Epstein has about three decades of experience defending all manner of insurance claims as well as coverage disputes.
Early Indicators of a High‑Value Claim
A May 28, 2015, report by Cole’s neurosurgeon, Dr. Honey, described devastating, permanent, cognitive impairment, aphasia, right‑sided paralysis, and blindness, with a bleak prognosis.
By June 5, 2015, Wright advised ICBC that Cole’s claim was likely to exceed policy limits.
The November 17, 2015, Policy‑Limits Demand
On November 17, 2015, Slater made a time‑limited offer open for 30 days to settle for the $2,000,000 policy limit plus costs and disbursements. Key conditions required Lau’s statutory declaration confirming no other responding insurance and net assets not exceeding $350,000. Finally, the offer noted that court approval was required due to Cole’s disability.
Wright’s Handling During and After the Offer
The Court stated that “Wright, in the 10 months between the Collision and the date of the … November 17 Offer, had not yet assessed or determined the issue of liability. Neither she nor ICBC had undertaken any meaningful investigation into the issue. She therefore had no information beyond what Slater had provided her with which to make tactical decisions and risk assessments for ICBC or Lau.” (Wright did not interview Lau until early 2017 and delayed retaining a reconstruction expert for over two years as she was waiting on receipt of the Vancouver Policy report regarding the collision.) The Court continued “Wright did not even follow up with or have ICBC investigators, to which she had access, contact or interview the people whom Slater had identified as witnesses in the November 17 Offer.”
As to quantum, Wright told ICBC she needed further disclosure before giving a reliable quantum opinion and proposed responding to seek outstanding materials, without warning either Lau or ICBC that delay could prejudice Lau.
Further, Wright did not advise Lau about the settlement offer’s implications or the risks of delay, and asked Epstein only whether Lau could provide the required statutory declaration. Acting on ICBC’s instructions, she emphasized waiting for disclosure and took no meaningful investigative steps on liability for many months. No extension of the 30‑day deadline was sought, and the offer expired without acceptance or counteroffer.
The ‘Wait and See’ Strategy
The claim handling strategy proposed by Wright and agreed to by ICBC - a “wait and see” approach benefited ICBC. If Cole deteriorated to the point that he would have to be institutionalized or died, ICBC may have to pay less than the policy limit. Delay essentially only carried the possibilities of either no change or a benefit to their interests. In other words, there was no downside to delaying for ICBC.
The Court stated “[h]owever, if Cole’s condition remained static over the period of delay or he regained some cognitive function, Lau would be exposed to limitless financial devastation in the form of damages over policy limits for which he would be personally liable. Further, “wait and see” engendered the possibility that Cole would no longer be open to the possibility of settlement at or around policy limits, as indeed happened.”
Epstein’s Handling During and After the Offer
Epstein was out of the office when the offer was received. He returned December 7, 2015. On December 9, he emailed Lau a personal financial statement template and suggested it “would be a good idea,” to complete it, acknowledging Lau “may be obligated” to swear it true, but did not convey urgency tied to the time‑limited offer. He did not speak with Wright before expiry, did not negotiate terms, did not request an extension, and did not urge Lau to prepare the statutory declaration described in the Offer. He later acknowledged there was “room for lawyering” on the net‑worth term, (meaning that the $350,000 asset level may have been raised through negotiation), but none occurred during the offer window.
The Failed Mediation
A mediation took place in July 2017. Cole sought over $13,000,000 plus costs; ICBC offered the policy limits plus costs, and Lau offered $100,000 personally, later increasing to $150,000 and $200,000, which was rejected. Slater, on behalf of Cole, demanded Lau’s house or all his assets in addition to limits to effect a settlement.
The Trial and Excess Exposure
Cole’s action proceeded to trial before a civil jury, which is quite rare in Canada. On October 16, 2017, the jury awarded Cole $4,073,850.51, later adjusted upward with the additional amount of $250,000 for tax gross‑up and management fees. ICBC paid the $2,000,000 limit plus the court costs awarded to Cole that were payable by Lau, leaving Lau with about $2,073,000 plus the additional amounts as personal exposure.
Lau subsequently faced enforcement and entered bankruptcy proceedings.
Standards of Care: Wright and Epstein
The Court held Wright owed duties as ICBC’s appointed counsel to treat Lau’s interests at least equally to ICBC’s and to act as a reasonably competent solicitor; she failed by not investigating in a timely fashion, not advising Lau of prejudice from delay, and by promoting a strategy with upside only for ICBC.
Epstein, as Lau’s counsel, was required to meet the standard of a reasonably diligent and competent solicitor; he failed to convey urgency, negotiate, or seek an extension, or prepare the net‑worth declaration during the offer window.
Evidence Supporting Breach Findings
For Wright: Although she conveyed to both Lau and ICBC that excess exposure existed in a timely fashion; she did not investigate liability early on; elected to deal with liability once the Vancouver Police had completed their report which apparently took about two years; did not undertake steps to anticipate and prepare for a limits demand; although she was the appointed defence counsel for Lau, she did not provide him with advice as to the implications of the ‘wait and see’ strategy and the conflict that the strategy carried for him.
For Epstein: The chief findings that led to the imposition of liability upon Epstein was his failure to communicate with Lau during the 30‑day window; failed to discuss the offer with Wright before it expired; failed to negotiate the declaration threshold; and after‑the‑fact, admitting that “lawyering” could have occurred.
The Court stated:
“Epstein took little if any action to adequately inform Lau about the terms, importance of and urgency surrounding the November 17 Offer - perhaps the one and only window Lau would have to avoid financial ruin. He failed to respond to Lau’s questions. He failed to communicate with Wright as he had indicated he would. He failed to “lawyer” the proposal by contacting Slater or Wright about its terms or a possible extension of the offer.
Ultimately, we can never know what would have happened had the defendants in this action properly carried out their duties in the Cole Claim. I accept that the November 17 Offer was not capable of acceptance in its initial form. However, given sufficient negotiation and flexibility from both parties, I find there was a possibility, beyond mere speculation, that, had the lawyers and ICBC promptly acted in the interests of Lau, a settlement agreeable to both sides might possibly have been reached and that that settlement would have involved less financial damage to Lau than the award at trial.
Therefore, I am satisfied that the failures of Wright, ICBC and Epstein resulted in Lau losing a chance to avoid or reduce his loss. In this way, I am satisfied that the causation required to award damages for negligence causing loss of chance…has been established.
Further, I make a finding that Lau did not contribute to this loss via contributory negligence or failure to mitigate. His actions show that he relied on the advice of his lawyers and trusted them to take the lead in navigating the litigation. He, as a lay person, cannot be faulted for doing so. In particular, his e-mails to Epstein during and around the currency of the offer show reasonably diligent seeking of guidance from his independent counsel.
ICBC’s Liability, Vicarious Issues, and Limitation
The Court held ICBC itself breached the duty of utmost good faith it owed to its insured by adopting and persisting in a delay-oriented, ‘wait and see’ strategy after recognizing early that the claim was likely worth more than the $2,000,000 limit. That strategy created upside for ICBC if Cole deteriorated or died, but exposed Lau to catastrophic personal excess liability if his condition remained static or improved enough that settlement at limits was lost.
The Court also found ICBC failed to investigate liability and quantum with reasonable promptness, failed to put itself in a position to respond meaningfully to the November 17, 2015, policy-limits demand, and failed to protect Lau's interests equally with its own when a clear conflict existed between the insurer's economic interests and the insured's excess-exposure risk.
What triggered the two-year limitation: On the Court's analysis, the material facts giving rise to Lau's claims against ICBC and Wright were discoverable more than two years before he commenced the action.
Emails between Epstein and Lau demonstrated that Epstein advised Lau in August 2017 that ICBC was prioritizing its interests ahead of those of Lau, placing Wright and ICBC at risk of bad faith. Once such email dated August 22, 2017, stated “Hi Seng - I have tried to pressure ICBC to putting in more money, but they have so far declined. In the big picture, it helps us because they are still only posting the money that they always should have posted, but now they are suffering for waiting so long.” The critical events underpinning that email were the mishandling and expiry of the November 17, 2015, time-limited offer, the absence of timely investigation or settlement steps during that window.
The Court held that the time period for this cause of action began in August 2017 and crystallized when Lau was left facing substantial excess exposure when the court confirmed the jury award in favour of Cole in October 2017. Lau filed his action in September 2019. He was out of time by just a few days, but out of time is out of time.
Why the limitation did not apply to Epstein: The Court reached a different conclusion on discoverability as against Lau's own counsel. Epstein's retainer, advice, and omissions were assessed separately, and the Court held the claim against him commenced in time as Epstein’s duties were ongoing and the breach was ongoing. That left Epstein as the only defendant against whom Lau could recover damages, even though the Court found that ICBC and Wright had also contributed to the lost settlement opportunity.
The Court did not impose liability on ICBC via Wright because both claims were out of time. As a result of that finding there was no discussion whether ICBC was vicariously liable for Wright’s breach of the duty of care owed to Lau.
Loss of Chance: No Proven Settlement, But a Real, Significant Lost Chance
The court held Lau could not prove, on a balance of probabilities, that the November 17 offer would have resulted in settlement, due to contingencies and deficiencies, but the Court did find that Lau established a real and significant lost chance caused by the combined negligence of Wright, ICBC, and Epstein.
The Court fixed Lau’s “loss of chance” at 15% after weighing both the strength of Cole’s claim and the obstacles to actually settling on the November 17, 2015, terms. It emphasized that Lau likely could not truthfully swear to net assets under $350,000, that he was only prepared to contribute modest personal funds even once his excess exposure crystallized, and that court approval of a capped settlement was far from assured. At the same time, the Honey Report showed from the outset that Cole’s devastating, permanent injuries placed the reasonable prospect of damages well in excess of the $2,000,000 limit, and the unprompted, policy‑limits November 17 Offer—on terms highly favourable to Lau and subject only to a statutorily‑required approval condition—demonstrated a real willingness on Cole’s side to settle.
Damages were calculated by applying 15% to the excess over policy limits, using a jury‑award‑after‑adjustments of $3,928,391.36 plus $250,000 for tax gross‑up/management fees, less $2,000,000 paid by ICBC, yielding $2,178,391.36, multiplied by 15% = $326,758.70. The Court also allowed 15% of bankruptcy‑related expenses when those expenses are ascertained. The court disallowed Lau’s claim for damages for mental distress.
Orders and Costs
The court found that ICBC, Wright and Epstein contributed to the lost chance, but only Epstein was liable due to the limitation bar against Wright and ICBC; Lau received pre‑judgment interest; Wright and ICBC were awarded costs against Lau, and Lau was awarded costs against Epstein.
Practical Takeaways for Insurers and Defence Counsel
Time will tell if this decision is appealed. In the meantime, this blistering decision of the British Columbia Supreme Court reiterates the standard of care for defence counsel appointed to defend the insured. Both the insurer and the insured are defence counsel’s clients. Defence counsel must not favour the interests of the insurer over the interests of the insured. Further, defence counsel must promptly seek instructions to investigate liability and damages, communicate conflicts and risks to the insured, and be ready to respond to time‑limited demands for policy limits. When such a demand is placed, the insurer’s liability is normally capped at the policy limits. The insured’s liability is limitless. This creates a significant conflict that may require the insured to seek independent legal advice.
The insurer must be prepared to expedite the internal approval process to authorize the claims examiner to extend the policy limits and engage with claimant’s counsel on terms, extensions, and approval logistics.
Independent/excess counsel must urgently marshal the insured’s financial information. It would be appropriate for excess counsel to ask their client to swear a statutory declaration as to their assets at the outset of the retainer. Further, excess counsel must monitor the conduct of the defence looking for opportunities to resolve the claim within the policy limits and ensuring that the insurer’s interests are not given priority to those of the insured.
Triage Checklist for Likely Excess-Exposure Files
The following checklist regarding the handling of excess claims emerges from the Lau decision. This checklist could also apply to the reverse situation where an insured is managing a defence within retentions that may implicate a primary layer sitting above the retentions. The rationale in Lau may be argued to permit a cause of action by the insurer against its insured for its failure to settle a claim within its retentions.
• Conduct an early/immediate review of medical, wage loss, and liability materials; this will flag any claim where probable damages may exceed limits.
- Investigate without delay: Secure witness statements, the insured interview, liability analysis, the police file, and any expert reconstruction or medical opinion needed to assess risk.
• Warn and advise the insured: explain excess exposure, conflict risks, and the practical consequences of any time-limited demand or settlement opportunity.
• Coordinate counsel roles: Clarify and document responsibility for asset declarations, asset information, and settlement instructions.
• Treat time-limited offers as urgent: diary the deadline, seek instructions immediately, request an extension where needed, and engage claimant counsel on missing conditions rather than letting the offer expire.
• Prepare for approval logistics: Where the claimant is disabled, or is a minor, begin the approval record early rather than treating approval as a reason to delay.
• Document authority steps: create a fast-track internal process for reserve review and authority to tender limits or negotiate within limits where excess exposure is realistic.
• Record the decision trail: Keep a clear file record of investigations, advice to the insured, settlement discussions, reasons for any non-acceptance, and all efforts to preserve an opportunity to settle.
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