Coverage Pointers - Volume XXVII No. 3

Volume XXVII, No. 3 (No. 702)
Friday, July 18, 2025
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.

It is a quiet time in the appellate courts, as it is every year during the summer months.  Search as we may, there just isn’t much to report on in New York.

We do offer you, in the attached issues, 20 pages of cases totaling about 8000 words. Not a bad offering from a quiet time.

Modern Day Hallucinations

And to entertain you, I did ask Artificial Intelligence to create a case for your edification and it’s in my column, a gift from ChatGPT.  If you want, I can probably create a reversal but a mythical appellate court as well. 

But hallucinated cases have become a compelling problem for the courts and opposing counsel.  Sanctions have generally been non-dispositive and under $5000 in fines, sometimes with referral to disciplinary committees.  Just a few hours ago, a Florida District Judge dropped the hammer on a lawyer, and his client, for multiple violations  It’s worth reading.

 

LinkedIn:

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 (now there’s a shock)  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 in 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.

 

Oh Good – 100 Years Ago:

Daily Sentinel
Rome, New York
18 July 1925

A Nail Kills a Steeplejack.

We all know what once happened- or did it really happen after all? – for lack of a horseshoe nail. From Worcester, Massachusetts, comes the tale of how a solitary nail high above the ground caused the death of a steeplejack. Barney Clancey, aged 18, was sitting in a boatswain’s chair suspended by a single rope, while he worked away on the steeple of the First Universalist Church which had recently been damaged by lightning. His mate was in a similar position on the opposite side of the steeple.

Supposedly unbeknown to Barney, the rope which supported him rubbed against a nail protruding from the steeple.

 

Peiper on Property (and Potpourri):

This week’s issue brings us to the mid-point in July.  For the last several years, this time has been marked by my return from IADC’s annual meeting.  This year the group convened in Quebec City which provided a renewed challenge for my fledgling French.  We got through it unscathed, for the most part.  And, I even tried to throw in a little Francaise at the conclusion of my presentation on corporate witness preparation. 

A return from IADC also marks the beginning of the end of Summer.  Football season is only six weeks away, with NFL teams reporting to camps in the next few weeks. The clock is ticking, so find a few more beach days.  Labor Day will be here before you know it.

Steve
Steven E. Peiper
[email protected]

 

Oh Good – 100 Years Ago:

Daily Sentinel
Rome, New York
18 July 1925

Life Insurance More Popular

Statistics for forty-five leading companies, handling 81 per cent of the total life insurance outstanding, show that for the first six months in 1925 their new business amounted to $5,222,000,000 as compared with a total of only $44,878,000,000 for the two years 1914 and 1915. In other words, it is said that the American people are now buying four times as much life insurance as they did ten years ago This is construed by George T. Wright, manager of the Association of Life insurance Presidents, as indicative of “a steady, consistent performance by Americans in their saving habits.”

 

Lee’s Connecticut Chronicles:

Dear Nutmeggers,

Somehow, we’ve reached another fortnight. I’m not quite sure how. Summer seems to be sailing by at flank speed—and I’ve barely been on the water. As some of you may know, it’s been my lifelong ambition to have a best friend with a sailboat. It continues to be a work in progress, but we’re still vetting applicants. Please contact me if you’d like to be considered.

A couple of good cases to report on this edition, although the pickings were slim. In one case, a court declined to grant two carriers summary judgment on bad faith, choosing to infer dishonest motive and a general business practice from facts that quite frankly sound like nothing more than negligence in the instant claim adjustment. This holding seems to be a departure from the recent trend.

In our second case, even though the court found that every material fact in the insurance application (other than name, date of birth, and address) was wrong and that the insurer, if it had the correct information, would have charged a substantially higher premium, denied a request to rescind coverage. Because all the application information came from the insured’s agent, the court found no intent on behalf of the insured to mislead the carrier.

Until next time, keep keeping safe,

Lee
Lee S. Siegel
[email protected]

 

Women and Insurance – 100 Years Ago:

The Buffalo News
Buffalo, New York
18 July 1925

A WOMAN’S
MONEY

By MARY ELIZABETH ALLEN

People are all agreed that insurance is an incentive to saving, and that it is a fairly good investment, while at the same time it looks toward the future. But they often make the mistake of delaying to take out insurance for themselves and their children, irrespective of the fact that each year’s delay incurs a loss of money. When delay is due to the certain fact that the family budget cannot allow for such expenditure, then there is nothing to do but wait until you can afford it. But it is always to your advantage to buy insurance at the earliest opportunity.

Some women explain the delay I this manner: “We need the money now for other things which we might spend on insurance premiums. Later, when we have a larger income, we will be better able to pay the premiums without depriving ourselves.” But later these women invariably discover that, with increasing income develop also increasing demands upon this income, and the problem is always present.

 

Ruffner’s Road Review:

Dear Readers,        

I hope everyone enjoyed their Fourth of July long weekend. We extended ours with a brief lake house vacation with the family the first half of the following week, enjoying some relaxing warm weather and time on the water!

This week’s case involves an insurer’s petition to permanently stay an insured’s demand for uninsured/underinsured motorist arbitration or, in the alternative, for an order for a framed issue hearing regarding the subject fraud defense. The court denied the insurer’s petition on the basis that it failed to show sufficient evidentiary facts tending to establish that the subject accident was indeed a fraudulent collision.     

Kyle
Kyle A. Ruffner
[email protected]

 

I’ll Drink to That – 100 Years Ago:

The Buffalo News
Buffalo, New York
18 July 1925

TEMPERANCE BOARD
IS ASSAILED AGAIN

Makes Mild Reply to Lamar’s
Attack on Dry
League.

WASHINGTON, July 18. – William H. Lamar, formerly solicitor of the Post office department, whose recent letter to an unnamed southern senator attacked the Anti-Saloon league and the board of temperance of the Methodist Episcopal church as lobbyists seeking the “control of government,” was mildly responded to in the last issue of the “Clip Sheet,” organ of the board.

“It is idle,” Mr. Lamar said, “for the ‘Clip Sheet’ to say that this board endeavors to exert no influence on legislation except such ‘as may arise from the presentation of facts and expressions of opinion in accord with the vast majority of the people of the country. The ‘Clip Sheet’ well knows that this vast majority, if it exists, has been brought about by the operation of the organization it represents, together with the Anti-saloon league and other religious or quasi-religious organizations.

 

Ryan’s Federal Reporter:

Dear Loyal Coverage Pointers Subscribers:

We are headstrong into camp season for the Maxwell boys and it’s daddy days, twice a week for baby Maxwell in July and August. Now 4 months and change, she is a bright spot and smiley one at that! Being a boy dad is wonderful. Being a girl dad is too. Combining the two is unmatched.

This edition, I have summarized a Second Circuit decision involving a claim for defamation and an employment-related practices exclusion.

Until next time,

Ryan
Ryan P. Maxwell
[email protected]

 

Scopes Monkey Trial, European Perspective – 100 Years Ago:

The Buffalo News
Buffalo, New York
18 July 1925

SWEDISH NEWSPAPERS
VIEW TRIAL AS JOKE

By F.A. MACKENZIE

STOCKHOLM, July 18. – The Tennessee monkey trial is being given great publicity here. The newspapers generally regard it as a joke, but some religious circles openly sympathize with William Jennings Bryan. The Svenska Morgenbladet says: 

“It is always good to see people of our day who are not afraid to stand up in defense of their religious convictions, even at the risk of being ridiculed by the whole world as old fashioned. Mr. Bryan, a man of world reputation, did not hesitate, under a shower of contempt, to defend his beliefs. Evan if his view is not accepted, his courage is worthy of respect.”

This newspaper declares that teachers in Sweden instructing pupils in Haeckelian atheism under the guise of Darwinism would be liable to prosecution.

Storm’s SIU:

Hi Team:

I hope you had an awesome 4^th of July celebration. 

One interesting case this week:

• Insurer Granted Summary Judgment Under the Crime Coverage Part of the Policy as a Forgery Had to be of a Financial Instrument to Trigger Coverage, Not Forgery of Other Documents.

More cases digests in two weeks.

Scott
Scott D. Storm
[email protected]

 

Different Kind of Shotgun Wedding – 100 Years Ago:

Press and Sun-Bulletin
Binghamton, New York
18 July 1925

COURTHOUSE JANITOR
AND HIS BRIDE ARE
ACCORDED CHARIVARI

Silas Roberts of the town of Binghamton, a janitor at the courthouse and Mrs. Roberts were given a charivari this afternoon by county officials, supervisors and friends, in honor of their recent marriage. They were presented with a purse of $50 in gold by friends about the courthouse and county employes.

Practically every office in the courthouse was represented in the party, in addition to Sheriff Scudder and his deputies. The trip to the Roberts home was made in automobiles, and upon arrival a suite was fired from shotguns. The presentation address was made by County Treasurer Walker F. Sherwood.

 

Fleming’s Finest:

Hi Coverage Pointers Subscribers:

This week’s case is one of two recent rulings from the Massachusetts Supreme Judicial Court regarding payments under the worker’s compensation fund. The SJC found an insurer in run-off (no longer issuing new policies) was entitled to payments. Stay tuned for the other case.

See you in a fortnight,

Kate
Katherine A. Fleming
[email protected]

 

Save Your Kisses – 100 Years Ago:

Saskatoon Daily Star
Saskatoon, Saskatchewan, Canada
18 July 1925

Dorothy Dix’s
Letter Box

The Young Man Who Is Pursued by Lovelorn Damsels;
Why It Pays a Girl to Keep Her Kisses for Her Fiancée

DEAR MISS DIX – I am a young man making not enough money to support a family. But I have been keeping company with two girls, both of whom want to marry me.

One girl is at work and makes a fairly good salary, and she says we could get by if we married, as she would continue to work. And when I tell her that I do not want to marry this wat, she gets peeved and says I don’t care as much for her as I say I do. The other girl is in high school. Recently I told her that I was not coming to see her anymore, and she cried as if her heart would break. She could not attend school and continued crying until she became so ill that they had to call in a physician and I had to go back to see her to save her life.

I am very much troubled and can’t decide between the two girls. What shall I do?  FRED

Answer:

A man who has the fascination for the female sex that you have, Fred, is too dangerous to be permitted to roam around loose. You should be locked up in a monastery or somewhere where you could not break so many susceptible hearts. Considering you own personal safety, I should say that your only salvation is in flight, for certainly one of the other of the lovelorn damsels will get you if you don’t watch out.

If you are not making enough money to support a wife and don’t know which one of the two girls you prefer, obviously you are no fit candidate for matrimony. A wife and a home are expensive luxuries in these days of the high cost of loving and living, and no man is justified in undertaking them until he has the price.

As for you schoolgirl crybaby, tut, tut, tut, and my boy! It is an old trick. Thousands of men who tried to break away from women that they didn’t love have had their backbones melt down in a gush of tears and have been led to the altar, it flatters a man’s vanity so to have a women cry for him that he hasn’t the nerves to resist. And women know this and trade upon it. Don’t worry about the girl dying for love of you. They never do.

So my advice is to wait until you are older; until you have more money and know which one of all the women in the world you want for a wife before you marry.  DOROTHY DIX

 

Gestwick’s Garden State Gazette:

Dear Readers:

It has been a quiet two weeks in the New Jersey courts. As such, I have nothing to share with you this time around. Hopefully, this means double decisions next time. See you in two.

Evan
Evan D. Gestwick
[email protected]

 

Save Your Liberties – 100 Years Ago:

The Kansas City Post
Kansas City, Missouri
18 July 1925

Advice to the
Lovelorn

By: BEATRICE FAIRFAX

Dear Miss Fairfax – Once before I came to you for advice and found it really helpful. I have been reading your columns for some time and come again for help.

I am a widow, divorced, not yet 25 years old and have a small daughter. A young man of my acquaintance before my marriage again has come into my life. We were the very best of friends and thought worlds of one another. He has been married also but has no children.

He says he still thinks as much of me as before and still seems real devoted. Now, Miss Fairfax, what I want to know is, do you think he can still feel the same after we have both been married or is he just telling me this? I feel there is a difference but I cannot tell which one of us has changed.

Would you advise me to still keep company with him or make new friends and let him pass out of my life again? He thinks since we both are married he should be permitted more liberties. That is where we disagree. Now, Miss Fairfax, just for that reason I am doubtful as to how he really feels.

My folks like him very much and he is very nice to my little girl. Of course they don’t know he thinks that way. Do you think I am right or wrong? He says this is just a faster age. – Princess Pat.

If your friend really thinks highly of you he will respect you highly and not wish to be permitted “more liberties.” The age may be faster but a real gentlewoman or gentleman will never be “fast.” I would make other friends and let him go his way. You do not mention if he is also divorced.

 

O’Shea Rides the Circuits:

Readers,

I write this looking toward an event filled weekend. Tonight, we head to Saratoga for a Friday night concert. Please do not inquire into the artist as its identity may hurt my credibility within the confines of the office. A not so slight hint is that the band is a mid-to-late 90s jam band whose namesake and lead singer is a known confidant of Adam Sandler. On Saturday, we then head home for a wedding.

For this edition, I look to a Seventh Circuit case addressing material differences between personal auto and commercial auto policies. The court looked to the public policy concerns regarding occupancy requirements in UM/UIM endorsements in Illinois.

Until Next Time,

Ryan
Ryan P. O’Shea
[email protected]

 

Flooding Not a New Problem – 100 Years Ago:

Finger Lakes Times
Geneva, New York
18 July 1925

THOUSANDS DEAD IN
KOREA FROM FLOODS

Large Section of Seoul, the Capital
City, Under Water With Many Buildings
Collapsing-Thousands Are
Marooned and in Desperate Situation

Shanghai, July 18. – Thousands are dead in Korea as the results of floods caused by overflow of the Han River, according to advices received here today from Keijo.

The entire city of Ryusan was submerged and it is supposed loss of life was very great, but destruction of communications made it impossible to obtain exact information.

Three hundred persons are believed to have been killed when a government school at Maho collapsed. Nine thousand villagers in the Tokuson area are cut off in a flooded area and loss of life which may have occurred there cannot yet be ascertained.

 

LaBarbera’s Lower Court Library:

Dear Readers:

For those wondering how my men’s league soccer career is going, I finally made my way to the pitch. My knee is healed, and I am, once again, running around like a chicken with my head cut off. This time I was able to play longer than five minutes without shredding the ligaments in my knee. Just in time for the tail-end of the season, with the hottest games of the year, during peak UV. My team made the playoffs though, and I can’t help but think without my stopwatch skills on the sidelines, we wouldn’t be here today.

It has been a slow week for the trial courts, but I did a find a brief opinion from New York County, granting a default motion in a case concerning whether the plaintiff was obligated to pay no-fault benefits for medical treatments for injuries allegedly arising out of a motor vehicle collision.

Until next time…

Isabelle
Isabelle H. LaBarbera
[email protected]

 

Brains Cannot be Bequeathed – 100 Years Ago:

Buffalo Post
Buffalo, New York
18 July 1925

Big Men Cannot
Bequeath Brains

Our Rockefellers, Carnegies, Fricks, Vanderbilts, Goulds, Hills, Harrimans, Astors, Eastmans, Stilmans, Pullmans, Fields, can bequeath enormous fortunes, but they cannot bequeath brains. Not one Napoleonic son has sprung from these Titans, not one son who is doing gigantic things in the world of finance, railroading or business. And news comes from Germany that the many columned monument spectacularly erected by Hugo Stines, the German Colossus, is tottering, with no son fit to hold it together.

Today 90 per cent of the biggest jobs in America are filled by first-generation leaders, such as Ford, Gery, Thayer, Schwab, Grace, Edison, White, Wilson, Sloan, Willys, Durant, Nash, Young, Swope, Farrell, Tripp, Crowley, Willard, Gery, O.P. Van Sweringen, Baker, Dillon, Mitchell, Sabin, Wiggin, Lamont, Carry, Doherty, to name only a few.

Is there not encouragement in this for the millions of earnest, diligent, ambitious American workers who are studying, striving, sweating to reach the top? Does it not mean that brains, not birth, not money, win?

May it not be, after all, that Providence is no fool? – Forbes Magazine.

 

Lexi’s Legislative Lowdown:

Dear Readers,

As you may remember, I planted a wildflower garden earlier this summer. The flowers are approaching full bloom, and I can’t wait to see how this turns out!

This week we discuss another bill that passed both houses and will be considered by the Governor. Bill S4157 would repeal Insurance Law 3403 which requires the anti-arson application.

Have a nice weekend,

Lexi
Lexi R. Horton
[email protected]

 

Drink Milk, Not Beer – 100 Years Ago:

Daily Sentinel
Rome, New York
18 July 1925

Another Food Fallacy

Is it true that milk, while rich in materials for bone structure and therefore, good for infants, is harmful for adults as it helps to harden the arteries, containing as it does a large amount of calcium or lime? – Z.M.

Answer – No, that is just one of the plausible notions conceived by the alleged “food experts” who have sprung up out of department store and manufacturers’ advertising departments to advise the American Wisenheimer family about diet. Physiologically there is no evidence that calcium (lime) salts in food or in drinking water have anything to do with arteriosclerosis or any other abnormal condition. Possibly an inadequate calcium ration may be responsible for some disease conditions.

 

Victoria’s Vision on Bad Faith

Dear Readers,

This week I’m coming off a busy weekend spent as a bridesmaid at a wedding in Chautauqua, New York. It was a beautiful wedding spent celebrating one of my closest friends, though it was a hot one — 88 degrees!

This week I have a decision from the Eastern District of Pennsylvania discussing a Plaintiff’s standing to bring a breach of contract and bad faith claims against an insurer.

Have a good weekend,

Victoria
Victoria S. Heist
[email protected]

 

Scopes Trial Ongoing – 100 Years Ago:

Mount Vernon Argus
White Plains, New York
18 July 1925

Experts Give Testimony
Before Scopes Attorneys

Men of Science Meet In Temporary Home of Clarence
Darrow and Reveal Mysteries for Printed Record

Dayton, Tenn., July 18. – Barred from the courtroom where science and religion were to fight a “duel to the death,” eight apostles of modern learning today gave secret testimony reconciling evolution to the Bible, before an audience of attorneys for John Thomas Scopes.

The scientific story of man’s creation, excluded from the Scopes trial by judicial decree, will go to the Tennessee supreme court, possibly the United States supreme court when the United States supreme court when the defense appeals the school teacher’s expected conviction and attacks the constitutionality of the anti-evolution law in higher tribunals. It will be entered on the “records of the case” Monday when the trials resumes after a two day recess.

The men of science, who hold that evolution does not deny divine creation testified in affidavit form at the instance of defense attorneys. They met in the Mansion, a misnamed rambling frame dwelling, half destroyed by wind and rain, perched on a wooded knoll overlooking Dayton. It is the temporary home of Clarence Darrow, nominal leader of the defense.

 

Shim’s Serious Injury Segment

Hi Readers,

I hope that you all had a great Fourth of July weekend but also took a moment to consider the rich history and tradition of our great nation. Did you know that on the first anniversary of our Independence Day, July 4, 1777, the City of Philadelphia celebrated with a fireworks display in the same fashion as in 2025? The one downside of Philadelphia is, of course, that it has the Phillies. That’s right, since our last Coverage Pointers column, the Phillies are still 0.50 games ahead of our beloved Mets in the National League East. After a few days off for the All-Star Break, the Mets will host Elly De La Cruz and the Cincinnati Reds for a series over the weekend. One of 2024’s heroes for the Mets, Sean Manaea, will take the mound for his first start of the season and second appearance since coming off the Injured List on Friday night. The Mets hope to start the second half of the season on a strong note and capitalize on what should be a favorable matchup for them.

In my second column I have shared a case decided in New York County Supreme Court. The Court denied defendants’ summary judgment motion, filed, in part, based on plaintiff’s alleged failure to prove a serious injury in accordance with the threshold requirements of Insurance Law § 5102(d). The Court held that a plaintiff’s positive MRI results alone may constitute a serious injury within the meaning of Insurance Law § 5102(d).

Until next time!

Stephen
Stephen M. Shimshi
[email protected]

 

He’d Know – 100 Years Ago:

The Buffalo News
Buffalo, New York
18 July 1925

BAMBINO EXPLAINS SECRET
OF HOME RUNS IN MAJORS

          CLEVELAND, July 17,--“Babe” Ruth, the king of swat, today explained the secret of so many home runs in the major leagues, and told of the scarcity of real “hit and run” batters.

          “The ball is all right. Nothing the matter with it. It’s the same as it was ten years ago. Only reason for the increased hitting, especially of home runs, is that where seven of every ten batters used to choke their bats, nine out of every ten now swing from the hip.”

 

North of the Border:

As we reach the height of summer, severe weather and wildfires are again battering communities across Canada and the United States. Central Texas has seen some of the most heartbreaking impacts this season, as memories of carefree days at summer camp have been replaced by memories of desperate efforts to survive sudden flash floods.

Other regions across the continent are also grappling with catastrophic rain events, hailstorms, and wildfires—dangers that are becoming more frequent, intense, and severe as the realities of climate change set in. According to AON, only 40% of weather-induced damages to residential property and municipal infrastructure are insured. This significant gap between insured losses and the actual cost of repairs has led insurers to impose sublimits on perils such as wind, hail, and by-law compliance, shifting substantial economic pressures onto property owners. As a result, an increasing number of lawsuits are being filed to contest the reach and application of these sublimits. In this issue, I examine one such case involving municipal infrastructure as the Supreme Court of Canada considers the same issue in the context of a residential property.

Until next time, enjoy the summer (between raindrops)!

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]

• There Are Almost 200 Reported Decisions Around the US and Elsewhere Where Courts Have Rightly Chastised Lawyers for Citing Hallucinated Cases – Cases Made Up by Artificial Intelligence.  So, for Entertainment Purposes Only, I Asked ChatGPT to Create One Discussing the Duty to Defend.  Don’t Miss the Footnote

   

• Since Under the NYC Administrative Code, a Motor Vehicle Carrying Passengers in the City of New York is Considered a “For-Hire Vehicle,” SUM Not Available for a Lyft Passenger Accident in the City of New York Despite SUM Coverage Provided in the Policy

 

PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper
[email protected]

 

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel
[email protected]

• Court Infers Dishonest Purpose From Allegations, Refused to Dismiss Bad Faith

• Misrepresentations by Agent Preclude Rescission

   

RUFFNER’S ROAD REVIEW
Kyle A. Ruffner
[email protected]

• Court Denies Insurer’s Petition to Stay Uninsured Motorist Arbitration Due to Failure to Show Evidentiary Facts Sufficient to Establish Fraudulent Accident

 

RYAN’S FEDERAL REPORTER
Ryan P. Maxwell
[email protected]

• Court Gives “Arising Out Of” Language Broad Interpretation in the Context of Employment-Related Practices Exclusions

 

STORM’S SIU
Scott D. Storm
[email protected]

• Insurer Granted Summary Judgment Under the Crime Coverage Part of the Policy as a Forgery Had to Be of a Financial Instrument to Trigger Coverage, Not Forgery of Other Documents

 

FLEMING’S FINEST
Katherine A. Fleming
[email protected]

• Insurer in Run-Off Entitled to Second-Injury Claim Reimbursements From the Massachusetts Worker’s Compensation Trust Fund

 

GESTWICK’S GARDEN STATE GAZETTE
Evan D. Gestwick
[email protected]

• New Jersey courts had nothing of interest this week. See you in two more.

 

O’SHEA RIDES the CIRCUITS
Ryan P. O’Shea
[email protected]

• Occupancy Requirement in UM/UIM Endorsement Applicable in Illinois Commercial Auto Policies, Despite Previous Voiding in Personal Auto Policies

 

LABARBERA’S LOWER COURT LIBRARY
Isabelle H. LaBarbera
[email protected]

• Insurer Default Motion Granted Resulting in Declaration That Plaintiff Is Not Obligated to Pay No-Fault Benefits for Medical Treatment

 

LEXI’S LEGISLATIVE LOWDOWN
Lexi R. Horton
[email protected]

• Proposed Legislation to Repeal Insurance Law Section 3403 Relating to Anti-Arson Applications Passes Both Houses

 

VICTORIA’S VISION ON BAD FAITH
Victoria S. Heist
[email protected]

• Plaintiff’s Breach of Contract and Bad Faith Claims Dismissed for Lack of Standing

 

SHIM’S SERIOUS INJURY SEGMENT
Stephen M. Shimshi
[email protected]

• See you in two weeks

 

NORTH of the BORDER
Heather A. Sanderson, K.C.
Sanderson Law
Calgary, Alberta, Canada
[email protected]

• An Ontario Trial Level Court Ruled That the City of Thunder Bay's Insurance Policy's Sub-Limit of $10 Million for Demolition and Increased Cost of Construction Applies to Both Damaged and Undamaged Facilities, Dismissing the City's Argument for Full Coverage of Bylaw Upgrades

 

All the best.

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
Agnes A. Wilewicz
[email protected]

COPY 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

Brian F. Mark

Scott D. Storm

Ryan P. Maxwell

Kyle A. Ruffner

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
Dan D. Kohane
[email protected]

Ryan P. O’Shea
[email protected]

Kyle A. Ruffner
[email protected]

 

APPELLATE TEAM
Jody E. Briandi, Team Leader
[email protected]

 

Topical Index

Kohane’s Coverage Corner

Peiper on Property and Potpourri
Lee’s Connecticut Chronicles

Ruffner’s Road Review

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

North of the Border

 

KOHANE’S COVERAGE CORNER
Dan D. Kohane
[email protected]

07/16/25         Hallucinated Case – For Entertainment Purposes Only
There Are Almost 200 Reported Decisions Around the US and Elsewhere Where Courts Have Rightly Chastised Lawyers for Citing Hallucinated Cases – Cases Made Up by Artificial Intelligence.  So, for Entertainment Purposes Only, I Asked ChatGPT to Create One Discussing the Duty to Defend

Don’t Miss the Footnote

SUPREME COURT OF THE STATE OF NEW YORK
Appellate Division, Second Department
Martinez Construction, Inc. v. Empire State Mut. Ins. Co.

The underlying action arises from a construction site accident in which a subcontractor’s employee sustained injuries after allegedly tripping over unsecured rebar. The employee commenced suit against Martinez, alleging negligence in site maintenance and failure to provide a safe workplace.

Martinez tendered its defense to Empire pursuant to a commercial general liability policy. Empire disclaimed coverage, asserting that the complaint did not allege an “occurrence” and that the “Contractor’s Risk Endorsement” excluded coverage for bodily injury to any worker “arising directly from site-specific negligence.”

Empire’s disclaimer was untimely and substantively flawed. It is well established that the duty to defend is “exceedingly broad” and arises whenever there is a reasonable possibility that the allegations in the underlying complaint fall within the scope of the policy’s coverage (see Automobile Ins. Co. of Hartford v Cook, 7 NY3d 131 [2006]; Fitzpatrick v American Honda Motor Co., 78 NY2d 61 [1991]).

Here, the complaint alleges negligence—a classic covered occurrence—and does not conclusively establish that the injury arose solely from Martinez’s site-specific acts. Moreover, Empire’s disclaimer, issued 37 days after tender, violated the timeliness requirements of Insurance Law § 3420(d)(2).

An insurer cannot evade its duty to defend by parsing pleadings in search of ambiguity to support exclusion (see BP Air Conditioning Corp. v One Beacon Ins. Group, 8 NY3d 708 [2007]). The allegations, broadly construed and liberally interpreted in favor of the insured, at minimum, triggered Empire’s duty to defend.

Accordingly, the Supreme Court properly declared that Empire is obligated to provide Martinez with a defense in the underlying action.

ORDERED that the order is affirmed, with costs.

Footnote
Empire contends—apparently with a straight face—that a construction worker tripping over site debris does not constitute an “occurrence.” This argument, though bold, conveniently ignores decades of New York case law and the basic structure of the policy it issued. One can only admire the insurer’s creativity in redefining "accident" to mean "only those things which cannot be plausibly linked to our insured." See also: Miraculous Policy Interpretation, Ltd. v Common Sense, 999 F.Supp.2d 404 (Imagined 2025).

 

07/09/25         Matter of Progressive Insurance Company v. Bruton
Appellate Division, Second Department
Since Under the NYC Administrative Code, a Motor Vehicle Carrying Passengers in the City of New York is Considered a “For-Hire Vehicle,” SUM Not Available for a Lyft Passenger Accident in the City of New York Despite SUM Coverage Provided in the Policy

This involved an application to stay arbitration of SUM  benefits.

In January 2023, Bruton was allegedly injured when a vehicle owned and operated by Primatov, in which Bruton was a passenger, was struck by another vehicle in Queens. At the time of the accident, Primatov was working as a driver for Lyft, Inc. (hereinafter Lyft) operating a TNC policy that provided SUM benefits. Lyft was insured by the Progressive and the policy included supplementary uninsured/underinsured motorist (hereinafter SUM) coverage.

In June 2023, Bruton submitted a claim under the SUM endorsement of Lyft's policy, and the petitioner denied the claim. In July 2023, Bruton filed a demand for arbitration of her claim for SUM benefits. In August 2023, the petitioner commenced this proceeding pursuant to CPLR article 75, inter alia, to permanently stay arbitration of Bruton's claim.

Here, Bruton was not an insured under the terms of the policy. To qualify as an insured under the SUM endorsement, inter alia, the accident must have occurred while the driver was operating a transportation network company (hereinafter TNC) vehicle. The policy explicitly provided that the definition of a TNC vehicle did not include "a for-hire vehicle, as defined in section 19-502 of the administrative code of the city of New York." "Pursuant to Administrative Code § 19-502(g), a 'for-hire vehicle' includes 'a motor vehicle carrying passengers for hire in the city'.  Here, since Primatov's vehicle was being used to carry a passenger for hire within New York City at the time of the accident, it was being operated as a for-hire vehicle rather than a TNC vehicle. Thus, Bruton did not qualify as an insured under the terms of the policy.

 

PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper
[email protected]

No case for me this time. See you in two weeks.

 

 

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel
[email protected]

07/02/25       KRM Realty, LLC v. Selective Ins. Co. of S.C.
Superior Court of Connecticut, Stamford
Court Infers Dishonest Purpose From Allegations, Refused to Dismiss Bad Faith

Selective and The Hartford insured the landlord and tenant, respectively, for property damage caused when a driver smashed into the building. After having paid over one million dollars for property damage and business income loss, the carriers moved for summary judgment on the plaintiffs’ breach of contract and bad faith counts. The court denied the motions, finding material questions of fact.

Significantly, in response to Hartford’s motion on common law bad faith, the court wrote that the plaintiffs' allegations, when construed broadly, were sufficient to infer a breach of the covenant of good faith and fair dealing. The court reasoned that the plaintiffs had offered sufficient circumstantial evidence to raise a triable issue of fact as to whether Twin City acted with a "dishonest purpose." Allegations about the thoroughness of the claim review and whether the insurer acted with due diligence or acted with a dishonest purpose were sufficient to allow the court to infer a dishonest purpose.

The same factual disagreements torpedoed The Hartford’s chances to strike the statutory bad faith counts. Allegations about Twin City's claim handling practices, including alleged systemic underpayments and misclassification of covered items, raised material factual issues about whether Twin City engaged in unfair trade practices as a general business practice.

Selective's bad faith claim fared no better. The record indicated, according to the court, genuine issues of material fact regarding whether Selective's continued reliance on more conservative engineering data after receiving materially different findings was the product of honest claim adjustment or a calculated decision to suppress payout. The court found that the same factual allegations precluded resolution of the plaintiffs’ CUIPA/CUTPA claim.

However, the court bounced the plaintiffs’ tortious interference claim. The plaintiffs failed to demonstrate that Selective acted with malicious intent to interfere with their contractual relationship, and there was no evidence of actual loss caused by Selective's conduct.

 

06/04/25       Chase v. Progressive Cas. Ins. Co.
Superior Court of Connecticut, Hartford
Misrepresentations by Agent Preclude Rescission

Following a bench trial, the court ruled in favor of the insured, refusing Progressive’s effort to rescind coverage. The plaintiff bought a used car, and the sales agent provided all the information used by the captive Progressive agent to complete the application. The court found that almost every factual representation in the application was wrong. However, because all the information was supplied by the agent, and there was no evidence that the insured ever reviewed the application, the court refused to rescind the coverage.

“As to the first element, there is no credible evidence that Ms. Boyce is the source of the incorrect information. That information was obtained by Ms. Perrelli from Mr. Manzi. As to the second element, there is no evidence that Ms. Boyce knowingly made a misrepresentation or any untrue statement. The third element is proven. Progressive would have charged a substantially greater premium if it were aware of Ms. Boyce's actual education, employment, marital status and, particularly, her resident teenage grandson who possessed a motor vehicle operator's license and who regularly operated the insured vehicle.

As Progressive has failed to meet its burden of proof as to the first two of three elements asserting misrepresentation, its fifth special defense fails. The court finds in favor of the plaintiffs against the defendant on the defendant's fifth special defense.”

 

RUFFNER’S ROAD REVIEW
Kyle A. Ruffner
[email protected]

07/06/25         Liberty Mutual Fire Insurance Company v. Ikey Wilson
Supreme Court, Kings County
Court Denies Insurer’s Petition to Stay Uninsured Motorist Arbitration Due to Failure to Show Evidentiary Facts Sufficient to Establish Fraudulent Accident

Respondent Ikey Wilson was a passenger in an Uber involved in a hit-and-run accident, where the Uber was rear-ended by an unknown vehicle that fled the scene. Wilson filed a demand for uninsured motorist arbitration and Petitioner Liberty Mutual denied the claim, asserting the accident was staged. Liberty Mutual then filed this petition to permanently stay the uninsured/underinsured arbitration or, in the alternative, for an order for a framed issue hearing regarding the subject fraud defense. Liberty also argued the Court should apply collateral estoppel based on a no-fault arbitration award, which found the subject accident was staged and Respondent Wilson's injuries did not arise from a legitimate accident, thus barring Wilson from relitigating the staged accident defense.

Respondent Wilson asserted that the burden of proof has not been met because Liberty Mutual must prove by clear and convincing evidence that the accident was staged. In support of this argument Wilson argued the affirmation from Liberty Mutual's Special Investigator, Ms. Lupo, was deficient since Ms. Lupo offered only vague descriptions of a broader fraud without linking Respondent Wilson or this accident directly. For example, Ms. Lupo asserted that this incident fits a pattern of staged accidents targeting Uber vehicles that occur shortly after the trip starts and involve minor collisions, the perpetrators flee, and the occupants later seek extensive No-Fault medical treatment. The Uber trip in question in this case was ordered with a gift card and originated from an account created the same day, an additional red flag according to Ms. Lupo. Moreover, Liberty Mutual alleges that Respondent Wilson and Mr. Jones, who were in the Uber vehicle together, provided false or inconsistent testimony. As such, Liberty Mutual argued the incident was staged, and that both Respondent Wilson and Mr. Jones participated in the fraud by providing materially false statements and pursuing no-fault benefits for injuries that were either non-existent or exaggerated.  

The court explained that "[a] deliberate collision caused in furtherance of an insurance fraud scheme is not a covered accident." There is no coverage even if it is alleged that parties are "innocent" to the alleged perpetration of the intentional event and an insurance carrier is not precluded from raising, at any time, that an automobile incident was not the product of a covered event, as coverage is a non-waivable matter. However, the party who seeks a stay of arbitration based upon a lack of coverage bears the initial burden of showing the existence of sufficient evidentiary facts to establish a preliminary issue which would justify the stay, such as whether the collision giving rise to this claim for uninsured motorist benefits was an accident or an intentional act. However, the court determined that Petitioner Liberty Mutual did not submit such evidence.

An insurer can premise its defense that a collision was not an accident without being required to prove that it was the product of fraud, which would require proof of all of the elements of fraud, including scienter; as such, the defense requires proof by a preponderance of the evidence, not by clear and convincing evidence. However, as the party seeking a stay of arbitration, Petitioner Liberty Mutual was required to show the existence of sufficient evidentiary facts to establish that the subject collision was not a true accident. In this case, the Court held that Ms. Lupo's affidavit was based on generalized trends and assumptions without corroborated data, which did not support Petitioner Liberty Mutual's theory of the purported fraud scheme with evidence to demonstrate that the theory is reasonable and did not link Respondent Wilson to the purported scheme. Therefore, the court found no evidence to show that any part of the claimed scheme was supported with a "founded belief" that the automobile accident in this case was staged.

Lastly, in terms of the preclusive effect of the prior no-fault arbitration award, the Court determined that Respondent Wilson was not a party to the arbitration, as he assigned his rights to No-Fault insurance benefits to his medical provider, and was therefore no longer in privity with provider and not bound by the arbitrator’s decision. Accordingly, there was no necessity for a framed-issue hearing as the petitioner has failed to make out a prima facie case in support of its claims. As such, the petition of Liberty Mutual was denied to the extent that it sought to permanently stay the subject uninsured/underinsured/SUM motorist arbitration.

 

RYAN’S FEDERAL REPORTER
Ryan P. Maxwell
[email protected]

07/11/25         Alexanian v. Gov’t Emps. Ins. Co., et al
Second Circuit Court of Appeals
Court Gives “Arising Out Of” Language Broad Interpretation in the Context of Employment-Related Practices Exclusions

An insured, Garo Alexanian, filed suit against his insurers, GEICO and Travelers, seeking defense and indemnity in a state lawsuit against a counter claim alleging that Alexanian had defamed a former employee. That former employee, Morales, alleged that Alexanian told his employees and doctors at his place of business that Morales was “a thief, a cheat, and a dishonorable person.” it was further alleged that Alexander told another employee that she forged that employee signature in doctor’s license, among other allegations touching upon the business and employment relationship. Morales alleged that Alexanian “acted maliciously and with wanton, reckless, and willful disregard for her rights with the purpose to injure her reputation, professional standing, and with intent to cause her to lose her job.”

Both Geico and Travelers relied correctly upon an employment-related practices exclusion in their respective policies. The Travelers policy excluded coverage for personal injury arising out of any employment-related practices, policies, acts, or omissions, such as coercion, demotion, evaluation, reassignment, discipline, defamation, harassment, humiliation or discrimination, directed at that person. Similarly, GEICO‘s exclusion precluded coverage for damages arising from business pursuits or business property of an insured.

The Second Circuit noted that New York interprets the cause a language “arising out of” broadly, meaning or originating from, incident to, or having connection with. Morales’s allegations against Alexanian were linked to workplace disputes, including an incident in which she confronted about a medical decision he had made at work since these allegations clearly originate from or have a connection with Alexanian’s employment of Morales, they were excluded from coverage under the employment-related practices exclusions in both policies.

 

STORM’S SIU
Scott D. Storm
[email protected]

02/03/25         KMS Dev. Partners LP v. Federal Ins. Co.
United States District Court, Eastern District of Pennsylvania
Insurer Granted Summary Judgment Under the Crime Coverage Part of the Policy as a Forgery Had to Be of a Financial Instrument to Trigger Coverage, Not Forgery of Other Documents

This is an insurance dispute in which the outcome depends upon the proper construction of seven words in a business insurance policy. Specifically, a rider to the policy provides coverage for losses due to "Forgery or alteration of a Financial Instrument" by a third party.  The insured here was victimized by a fraud scheme involving phony signatures, but none of the signatures were affixed to financial instruments.  The critical issue then was whether the coverage extends to documents other than financial instruments.

KMS was defrauded by an individual impersonating a wealthy investor.  The impersonator signed fraudulent documents including a Term Sheet, Equity Letter and Introduction Letter.  KMS paid $300,000 and $500,000 to the fraudster based on these documents.  KMS had an insurance policy with Federal Insurance Company.

Relevant to the present matter is "Insuring Clause (D): Forgery Coverage." The Forgery provision provides that: "The Company shall pay the Parent Organization for direct loss sustained by an Insured resulting from Forgery or alteration of a Financial Instrument committed by a Third Party."

Under the Policy, "forgery" is defined as "the signing of another natural person's name with the intent to deceive, but does not mean a signature that includes, in whole or in part, one's own name, with or without authority, in any capacity for any purpose."  "Financial instrument[s]" are defined as "checks, drafts or similar written promises, orders or directions to pay a sum certain in money, that are made, drawn by or drawn upon an Organization or by anyone acting as an Organization's agent, or that are purported to have been so made or drawn." 

The parties dispute: (1) the presence of a forgery; (2) whether the Forgery provision requires that a forgery be "of a financial instrument"; and (3) whether Plaintiff's loss falls within the scope of the Policy's enumerated exclusions.

The insured contends that the Policy covers forgery even in the absence of a financial instrument.  Plaintiff effectively construes the Forgery provision as providing coverage for losses resulting from "(1) forgery; or (2) alteration of a financial instrument."

In support of this formulation, Plaintiff relies on the so-called "rule of the last antecedent," which provides that "a limiting clause or phrase should ordinarily be read as modifying only the noun or phrase that it immediately follows."  Plaintiff asserts that, at a minimum, because the rule of the last antecedent might apply, the provision is ambiguous.

In response, the carrier points to a series of cases in which courts have declined to adopt the last antecedent principle to interpret similar or identical contractual language. Defendant invokes the "series-qualifier" canon, "when there is a straightforward, parallel construction that involves all nouns or verbs in a series, a modifier at the end of the list normally applies to the entire series."  This interpretive rule "generally reflects the most natural reading of a sentence."  Accordingly, "[w]hen several words are followed by a modifying phrase which is applicable as much to the first and other words as to the last, the natural construction of the language demands that the modifying phrase be read as applicable to all."  Defendant argues that the series qualifier doctrine compels a reading in which "financial instrument" modifies both "alteration" and "forgery."

The Court said that the canons that the parties cite offset each other.

The Court said that the policy is not ambiguous, as disagreement between parties does not necessarily create ambiguity.  A contract is ambiguous if it is reasonably susceptible of different constructions and capable of being understood in more than one sense. Disagreement between the parties over the proper interpretation of a contract does not necessarily mean that a contract is ambiguous. Where the meaning of the contract language is clear, the last-antecedent rule should not be used to create ambiguity. The last antecedent principle provides aid to discovery of intent or meaning but is not an inflexible and uniformly binding rule. The last antecedent rule does not create ambiguity where it is clear from the document as a whole that the phrase in question was intended to apply to all of the items that are listed before the qualifying phrase.

A plain reading of the policy language requires that a forgery be of a financial instrument to trigger coverage, not forgery of other documents.  The Term Sheet, Equity Letter, and Introduction Letter signed as part of the fraud scheme were not financial instruments under the policy definition. The Court held that the fraudulent documents signed were not financial instruments as defined in the policy.  Financial instruments are defined as checks, drafts or similar written promises, orders or directions to pay a sum certain in money, which are made, drawn by or drawn upon an Organization or by anyone acting as an Organization's agent, or that are purported to have been so made or drawn.  Because the forged documents were not financial instruments, the insured's losses are not covered under the Forgery provision of the policy.

Other federal courts have interpreted similar policy language to require forgery of a financial instrument. 

 

FLEMING’S FINEST
Katherine A. Fleming
[email protected]

07/01/25        Arrowood Indem. Co. v. Worker’s Comp. Trust Fund
Massachusetts Supreme Judicial Court
Insurer in Run-Off Entitled to Second-Injury Claim Reimbursements From the Massachusetts Worker’s Compensation Trust Fund

Previously injured employees who sustain a further work-related injury (“second injury”), the severity of which is exacerbated by the prior injury, are paid a portion of the compensation to which they are entitled under the Massachusetts Workers’ Compensation Trust Fund (trust fund). The trust fund is administered by the Department of Industrial Accidents (“DIA”). The act permits certain categories of employers to “opt out” of paying assessments to the trust fund, subject to the condition that these employers cannot benefit from specified trust fund reimbursements, including second-injury reimbursements.

Arrowood Indemnity Company was the worker’s comp insurer for Scully Signal Company in Massachusetts. A Scully employee sustained a work-related back injury necessitating surgical treatment. He returned to work at Scully but experienced chronic lower back pain in the following years. The employee sustained a second work-related back injury, and an impartial examiner later concluded that the employee would probably not return to any substantial gainful employment. Arrowood initiated payment to the employee under Scully’s worker’s comp policy that month. Arrowood later entered run-off, meaning it stopped issuing new policies but continued to administer and pay claims under previously issued policies. Moving forward, Scully obtained worker’s comp insurance through another insurer and continued to pay the mandatory employer assessments to the trust fund via these insurers, so Scully remained a trust fund participant. Because Arrowood no longer collected premiums from employers while it was in run-off, it also no longer collected the employers’ mandatory assessments to transmit to the trust fund. Pursuant to its ongoing reporting obligations under the act, however, Arrowood continued to file the requisite documentation with the trust fund.

Arrowood filed a petition for second-injury reimbursements from the trust fund for Arrowood's payments to the Scully employee. After the employee settled his injury claim against Scully in 2008, Arrowood and the trust fund entered into a separate settlement agreement regarding Arrowood’s reimbursements. The trust fund was paying second-injury reimbursements to Arrowood but began denying the requests in 2015. Because Arrowood was in run-off, and therefore no longer collecting and transmitting employer assessments to the trust fund while in this status, the trust fund asserted that Arrowood was no longer eligible for second-injury reimbursements. Arrowood filed a complaint in Superior Court for enforcement of its settlement agreement with the trust fund. The Superior Court dismissed the complaint without prejudice to Arrowood’s right to seek judicial review of the DIA’s final decision. The DIA’s reviewing board affirmed the denial of the claim. The Appeals Court agreed with Arrowood and reversed the decision. 

The Massachusetts Supreme Judicial Court allowed the trust fund’s application for further review and agreed with the Appeals Court’s reasoning and interpretation of the statutory provisions at issue. The SJC rejected the trust fund’s argument that the provisions do not expressly address whether an insurer in run-off is eligible for second-injury reimbursement, finding the interpretation was not supported by the plain language or overall structure of the act. The act enumerates three categories of nonparticipating employers that are excluded from trust fund reimbursements: any non-insuring public employer, self-insurer, or self-insurance group which has chosen not to participate in the fund. The three categories are the exceptions to second-injury reimbursement eligibility. The categories do not include insurers in run-off, and the SJC reasoned that neither the plain meaning nor the statutory definitions of the terms included insurers in run-off. The SJC noted that it is the employers, not the insurers, who pay for the trust fund, and any reimbursement received by Arrowood would be a partial offset to its already completed disbursements as opposed to a windfall. Accordingly, the SJC held that insurers in run-off are not precluded by statute from receiving second-injury reimbursements when such insurers have paid out the associated workers’ comp benefits to an injured employee.

 

GESTWICK’S GARDEN STATE GAZETTE
Evan D. Gestwick
[email protected]

New Jersey courts had nothing of interest this week. See you in two more.

 

O’SHEA RIDES the CIRCUITS
Ryan P. O’Shea
[email protected]

07/11/25        Rahimzadeh v. Ace Am. Ins. Co.
United States Court of Appeals, Seventh Circuit
Occupancy Requirement in UM/UIM Endorsement Applicable in Illinois Commercial Auto Policies, Despite Previous Voiding in Personal Auto Policies

Rahimzadeh sustained injuries when he operated his bicycle and was struck by an underinsured driver. Accordingly, Rahimzadeh sought underinsured motorists coverage (“UIM”). However, the UIM coverage Rahimzadeh sought was under his employer’s commercial auto policy. The employer, Medtronic PLC, previously provided Rahimzadeh with a company car as an employment perk. ACE insured the vehicle. The policy’s relevant language required Rahimzadeh to “occupy a covered auto.” ACE denied Rahimzadeh’s UIM claim because he did not occupy Medtronic PLC’s vehicle.

The argument presented by Rahimzadeh was that the policy’s occupancy requirement was void against public policy. He relied upon Galarza v Direct Auto Ins. Co., 473 Ill Dec 464, 234 NE3d 75, 2023 IL 129031 (2023). Galarza involved similar facts, specifically, a bicyclist seeking UM/UIM coverage for a collision with an uninsured motorist. The Illinois Supreme Court found occupancy requirements violated the state’s public policy, and thus, afforded UM/UIM coverage to the bicyclist in Galarza. The key distinguishing feature of Galarza is that it involved a personal auto policy where the UM/UIM claimant qualified as an insured due to family member status, not a commercial auto policy issued to a company.

ACE highlighted the distinguishment between personal auto and commercial auto insurance policies. ACE identified Stark v Illinois Emcasco Ins. Co., 373 Ill App 3d 804, 311 Ill Dec 944, 869 NE2d 957 (2007), which upheld the occupancy requirement in a commercial auto policy. In Stark, the insured’s sole officer sought UM/UIM coverage for injuries sustained from a hit and run accident as he walked through a parking lot. The Illinois Appellate Court upheld a denial of coverage because the named insured was a company, a separate legal entity from the shareholder, and thus, the officer was not occupying a covered vehicle at the time of his injury.

On appeal, the Seventh Circuit noted Galarza chose not to overrule Stark but distinguish  the case. Indeed, the court noted the different types of auto policies raise different public policy concerns because the policies serve two different purposes. Particularly, that Galarza addressed a familial relationship and the Illinois Supreme Court stressed that the mandatory UM/UIM coverage for all family members could not be artificially constricted. Based upon this material difference, the court applied Stark. As such, Rahimzadeh did not occupy a covered vehicle, and the ACE policy afforded no UIM coverage for his claim.

 

LABARBERA’S LOWER COURT LIBRARY
Isabelle H. LaBarbera
[email protected]

06/20/25         Government Empls. Ins. Co. v. American Med. Initiatives, P.C.
Supreme Court, New York County
Insurer Default Motion Granted Resulting in Declaration That Plaintiff Is Not Obligated to Pay No-Fault Benefits for Medical Treatment

Government Employees Insurance Company, including its subsidiaries and affiliates, Geico General Insurance Company, Geico Indemnity Company and Geico Casualty Company (“Plaintiff”) commenced a declaratory judgment seeking a declaration that Plaintiff is not obligated to pay no-fault benefits for medical treatment of Nadine Bolling and Danielle Bratton (the “Claimants”) for injuries allegedly sustained in a motor vehicle collision occurring in October 2022. Plaintiff identifie3d that the investigation indicated that the Claimants’ injuries did not arise out of the collision, and the Claimants’ failed to respond to certain post-EUO demands, which was a prerequisite to insurance coverage. Plaintiff moved for default judgment against a majority of the medical defendant providers, as well as the Claimants.

The Court found that Plaintiff has satisfied the requirements sufficient to establish entitlement to a default judgment. The Plaintiff submitted an affidavit of service, documenting service on the corporate defendants through the New York State Secretary of State, and on the individual defendants pursuant to CPLR 308(2). Further, the Plaintiff established that it had mailed the summons and complaint to the corporate defendants, required by CPLR 3215(g)(4).

The Court additionally found that Plaintiff had submitted facts constituting the claim. In support of its claim that the Claimants’ injuries did not arise from the subject motor vehicle incident, the Plaintiff submitted an affidavit of a GEICO Claims Associate, detailing the basis for the conclusion that the injuries did not arise from the subject incident. Additionally, the Plaintiff submitted evidence establishing that the Claimants’ failed to appear for duly scheduled examinations under oath.

Accordingly, the Court granted the default judgment and declared that Plaintiff owes no duty to provide, pay, or honor any no-fault claims of the defaulting defendants.

 

LEXI’S LEGISLATIVE LOWDOWN
Lexi R. Horton
[email protected]

07/18/25        New York Senate Bill S4157
New York State Senate
Proposed Legislation to Repeal Insurance Law Section 3403 Relating to Anti-Arson Applications Passes Both Houses

Bill S4157 repeals provisions relating to mandatory anti-arson applications for insurance coverage to insure any building against the peril of fire or explosion.

The anti-arson application law was enacted to give insurers ownership and property valuation information to assist in the investigation of arson. However, the justification for Bill S4157 states that present-day arson investigations no longer rely on the anti-arson application form to determine ownership and property valuation and fraud statements are collected through other means. Because the information is no longer used, completing and collecting this form creates a significant burden for both the consumers and the insurers.

If singed by the Governor, the bill provides that the act shall take effect immediately.

 

VICTORIA’S VISION ON BAD FAITH
Victoria S. Heist
[email protected]

07/14/25         Adams v. State Farm Fire & Cas. Co.
United States District Court, Eastern District of Pennsylvania
Plaintiff’s Breach of Contract and Bad Faith Claims Dismissed for Lack of Standing

In this case, two homeowners, J. Edison Adams and Janice Adams ("Plaintiffs") sought coverage under a homeowners insurance policy issued by State Farm Fire and Casualty Company ("State Farm”). The State Farm Policy was issued to the sole named insured, J. Edison Adams.

State Farm denied the claim to Mr. Adams for the Coverage A portion of the policy because Mr. Adams did not reside at the premises during the policy period, and thus, the premises did not qualify as a "residence premises" under the policy. State Farm disclaimed coverage to Mr. Adams based upon his examination under oath testimony in which Mr. Adams stated he was in the Dominican Republic during the entire policy period, except for four days when he attended a funeral in New York. State Farm also denied the claim to Janice Adams, their children, and grandchild under the Policy, because they did not meet the definition of "you" or "your relatives" and because their personal property "was not on the part of the 'residence premises' occupied exclusively by an insured."

After State Farm denied the claim, the Plaintiffs sued State Farm, alleging breach of contract and statutory bad faith. State Farm only moved to dismiss the claims brought by Janice Adams for lack of standing, stating the complaint does not allege that Janice Adams has standing as either a named insured or a third-party beneficiary of the policy.

The Court dismissed the complaint, stating that as pleaded, the complaint does not allege that Janice Adams has standing, either as a named insured, a third-party beneficiary, or an additional insured. The complaint did not include any allegations that could infer that Ms. Adams could qualify as a relative of Mr. Adams under the policy. Accordingly, the Court found that she lacked standing to sue to enforce the contract. Further, the complaint does not allege that State Farm accepted premium payments from Ms. Adams, to support the Plaintiffs' argument of waiver or estoppel.

Accordingly, the Court dismissed the complaint without prejudice because Ms. Adams lacked standing to sue State Farm for breach of contract or bad faith. The Court cited Weiser v. Great Am. Ins. Co., 453 F.Supp. 3d 711, 718 (E.D. Pa. 2020), which held that "a party who is neither an insured nor a third-party beneficiary of an insurance policy cannot assert a claim for breach of contract ort statutory bad faith.”

 

SHIM’S SERIOUS INJURY SEGMENT
Stephen M. Shimshi
[email protected]

07/02/25       Hamilton v. Caballero
New York County Supreme Court
A Plaintiff’s Positive MRI Results Alone May Constitute A Serious Injury

This case involves personal injuries suffered by plaintiff Rosemary Hamilton in connection with a motor vehicle accident that occurred on September 29, 2017, on Front Street near Uniondale Avenue, Uniondale, New York. Plaintiff was operating a four-door sedan and was stopped behind two vehicles at a traffic light. The passenger’s side of the defendants’ vehicle, an ambulance, struck the driver’s side rear bumper of plaintiff’s vehicle. Plaintiff alleged the following injuries in her bill of particulars: (1) injuries to the lumbar spine; (2) lumbar spine surgery; (3) right knee meniscus tear; (4) straightening of the normal cervical lordosis; (5) disc bulges; (6) thoracic spine sprain; (7) disc bulge in lumbar spine; (8) acute radiculopathy; (9) acute radiculopathy at S1; peripheral neuropathy of lower extremities; (10) shoulder derangement bilaterally; (11) left knee contusion; and (12) post-concussion syndrome, under four (4) of the nine (9) categories of serious injuries set forth under Insurance Law § 5102(d) ((1) permanent loss of use of a body organ, member, function or system; (2) permanent consequential limitation of use of a body organ or member; (3) significant limitation of use of a body function or system; and (4) a medically determined injury or impairment of a non-permanent nature which prevents the injured person from performing substantially all of the material acts which constitute such person's usual and customary daily activities for not less than ninety (90) days during the one hundred eighty (180) days immediately following the occurrence of the injury or impairment).

Defendants filed a motion for summary judgment on the partial basis that plaintiff could not prove a serious injury in accordance with the threshold requirements of Insurance Law § 5102(d). The defendants’ IME doctors reports confirmed that there was no causal relationship between plaintiff’s alleged injuries and the subject accident. Defendants also argued that the evidence established that plaintiff was able to perform all of her day-to-day activities for ninety (90) days during the one hundred eighty (180) days immediately following the accident. Defendants’ IME doctor, Dr. Kim, performed an orthopedic exam of plaintiff and opined that plaintiff suffered a cervical strain that “resolved.” Additionally, plaintiff’s cervical MRIs revealed “stable, multilevel, spondylotic changes to her cervical spine, appropriate for [her] age group and no findings of acute or subacute traumatic injuries related to the subject accident.” Dr. Kim’s findings also revealed range of motion deficits in plaintiff’s lumbar spine which were “expected in an individual with pre-existing, degenerative changes.” Furthermore, there were “no objective findings of any ongoing causally related issues in plaintiffs lumbar spine, and plaintiff does not require any further causally related orthopedic treatment in her lumbar spine.”

Plaintiff’s treating physician, Dr. Rafiy, opined that it is “within a reasonable degree of medical certainty, that due to ongoing symptoms, restrictions in range of motion almost seven years after the incident, MRI findings, X-ray findings, surgeries, intraoperative findings, and my own clinical examinations and findings, that [plaintiff's] injury represents a significant limitation in the use of her lumbar spine, and a permanent disability.” According to Dr. Rafiy, based on the fact that Ms. Hamilton was pain free, symptom free, and neurologically intact prior to the subject incident, with no prior trauma or medical history with treatment to her lumbar spine, that the subject accident was causally related to her lumbar spine injuries.

The Court stated in its decision that to satisfy the statutory threshold pursuant to Insurance Law § 5102(d), plaintiff must submit competent objective medical evidence of her injuries, based on the performance of objective tests. Positive MRI results may constitute a serious injury within the meaning of Insurance Law § 5102(d). As such, the Court found that there were sufficient questions of fact to preclude a decision on the pending summary judgment motion in favor of defendants with respect to the serious injury threshold categories alleged by plaintiff including: (1) permanent loss of use of a body organ, member, function or system; (2) permanent consequential limitation of use of a body organ or member; (3) significant limitation of use of a body function or system; and (4) a medically determined injury or impairment of a non-permanent nature which prevents the injured person from performing substantially all of the material acts which constitute such person's usual and customary daily activities for not less than ninety (90) days during the one hundred eighty (180) days immediately following the occurrence of the injury or impairment. Accordingly, defendants' motion for summary judgment on the basis that plaintiff’s alleged injuries failed to satisfy the serious injury threshold pursuant to Insurance Law § 5102(d) was denied.

 

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.

06/09/25         City. of Thunder Bay v. Ontario Mun. Ins. Exch. et al.  
Ontario Superior Court of Justice
An Ontario Trial Level Court Ruled That the City of Thunder Bay's Insurance Policy's Sub-Limit of $10 Million for Demolition and Increased Cost of Construction Applies to Both Damaged and Undamaged Facilities, Dismissing the City's Argument for Full Coverage of Bylaw Upgrades

Thunder Bay, situated on Lake Superior, with a population of just over 100,000, is the regional service centre for Northwestern Ontario. The 1970 amalgamation of Fort William and Port Arthur created Thunder Bay. Today, Thunder Bay consists of the City proper with two distinct ‘neighbourhoods’ (the former Fort William and Port Arthur), plus several surrounding municipalities and the Fort William First Nation.

Thunder Bay’s weather is heavily influenced by Lake Superior – the summers are humid and hot and the winters cold and windy – Thunder Bay holds the Ontario record for the coldest day with windchill: January 10, 1982, -72.4F.

On the evening of May 26, 2012, a low-pressure system and associated warm front moved north from the state of North Dakota to sit just south of Thunder Bay.  Over the next two days, waves of thunderstorms pounded the city with rain and heavy winds, resulting in flash flooding.  Authorities in Thunder Bay declared a state of emergency and the city was subsequently declared a disaster area by the Ontario Ministry of Municipal Affairs and Housing.  In total, rainfall in Thunder Bay in May of that year totaled 206 mm (8.1 in), 310% above normal, shattering the previous monthly record set 41 years before that. Half of that amount fell during the May 26th storm.  In short order on May 26-28, there was flash flooding causing damage and destruction to between four and five thousand homes, washed out roads, and damage to the sewage treatment plant. The damage to that plant threw it offline causing multiple sewer backups that only compounded the overland flooding.

According to “TBnewsWatch,” the damage to the sewage treatment plant was extensive: Tunnels were flooded, machines and equipment were damaged. The repair costs were estimated at $58 million.

Two separate legal battles concerning the sewage treatment plant emerged following this rain event. A class action lawsuit – seeking about $375 million – was filed by property owners against the city, alleging the failure of the sewage plant (and resulting sewer backups) was the result of operating negligence. The second lawsuit was a coverage action initiated by the City against its insurance providers for the damage to that plant.

The central issue in the coverage lawsuit was whether the City’s property policy paid the full cost of the increased repair costs owing to building code upgrades or similar requirements that had been introduced since the plant's initial construction. The City and the insurers disagreed on whether these costs were subject to a $10 million sub-limit specified in the policy or whether the City was entitled to the full cost which was estimated to be about three times that limit.

Following the damage, and despite taking years, the City proceeded with the repair, finding the money from other budgets.

The coverage issue was heard in March of 2025. The judgment was issued June 9, 2025.

The Policy

The key policy provisions are below. The underlining for emphasis was introduced by the Court.

The Declarations set out several “Sub-Limits,” including the following:

Demolition and Increased Cost of Construction $10,000,000

Two additional policy provisions were central to the argument, and they are also reproduced below:

 

The City’s Argument

The City argued that the grant of code upgrade coverage, as set out under replacement cost, is clear, and that the onus then shifts to the insurers to prove a limitation on that coverage, which must be clearly and unambiguously expressed.  The DICC clause is an extension, offering distinct coverage that is separate from the replacement cost code upgrade provisions. They assert that the DICC provisions relate to upgrades to undamaged parts of the building or required changes to building size or configuration, while the replacement cost provisions relate to the damaged property. On this basis, they argued that the City is entitled to the full cost of the bylaw upgrades.

The Insurer’s Argument

In reply, the insurers argued that the policy is clear; reading the policy as a whole, there is no ambiguity. All by-law and code compliance costs are capped by the $10 million sub-limit.

The Decision

The Court found that:

• The policy clearly states that the Limit of Liability is subject to sub-limits.

• The Declarations set out a sub-limit of $10 million for Demolition and Increased Cost of Construction.

• Following the Declarations are the words “This Policy Contains a Clause(s) that may limit the amount payable.”

• The Insuring Agreement provides that the Policy is “subject to the conditions and limitations as herein set forth.”

• The Declarations and Conditions set out the wording of the Demolition and Increased Cost of Construction sub-limit, which is clear and unambiguous.

The Court dismissed the City’s argument stating that the fact that there is coverage for bylaw and code upgrades under the DIIC does not mean that the sublimit does not apply to that coverage.  The DIIC does not apply solely to the undamaged portion of the plant that must be brought up to code because of the covered damage to other parts of the plant. The wording states that the DIIC applies to “the increased cost of repair or reconstruction of the damaged and undamaged facility” (emphasis added).  Accordingly, read as a whole, the Court found that the policy is not ambiguous.  The DICC clause, as the insurers argue, mirrors, and, to a limited degree, expands upon the replacement cost clause, recording a mutual insuring intent to grant code compliance cost coverage, up to a stated sub-limit, extending restricted betterment. Therefore, there was no need for recourse to the general rules of contract construction to resolve ambiguities.

As to costs, on a full indemnity basis, the insurers claimed $72,000 in costs. The Court reduced the cost award to what it called a more reasonable amount and ordered the City to pay partial indemnity costs of $25,000.

Comment

In the same month that this case was argued, the Supreme Court of Canada heard the argument in the appeal from Trillium Mutual Insurance Company v. Emond (2023), 2023 ONCA 729.

In Trillium, the issue is whether a home insurance policy’s guaranteed replacement cost (GRC) endorsement includes payment of any additional costs required to rebuild the home under new and enhanced regulatory standards. As stated in the Supreme Court summary:

“The insureds had purchased a standard form residential ‘Homeowners’ Package Comprehensive Form Insurance Policy’ from the respondent, Trillium Mutual Insurance Company (‘insurer’). Their home was severely damaged by an April 2019 flood and deemed a total loss.

The insurer acknowledged coverage for the loss under the policy. But the parties couldn’t agree on what, if any, replacement costs for the insureds’ home were excluded from coverage under the policy. The Edmonds claimed their rebuilding costs were fully guaranteed by the policy’s GRC endorsement.

Trillium acknowledged GRC coverage was applicable to replace the Edmonds’ home. But the insurer argued the necessary costs to comply with the …[area’s] policies and other by-laws – and regulations enacted after the home was originally built – were excluded from coverage by a policy exclusion.”

At trial, the insureds were successful; the Ontario Court of Appeal stated that the upgrade costs were limited as stated in the policy. The Supreme Court of Canada determined that the coverage issue was one of national importance and agreed to hear the insureds’ appeal from the Ontario Court of Appeal decision. We now await judgment from the Supreme Court.

The cost of reconstruction of residential properties and municipal infrastructure to address damage from severe and unpredictable weather events has increased, driven in part by regulatory improvements required by provincial laws, municipal regulations, and common law. Notably, these regulatory enhancements are also motivated by the growing need to respond to the increasing severity of rain events that produce flooding, hail, and wildfires. Insurers have attempted to limit their exposure by offering stipulated sublimits on the regulatory enhancements to reinforce that property insurance is premised upon indemnity for the physical building that was insured before it was damaged as opposed to the function that the building served at the time it was damaged. As a result, this matter holds considerable importance for Canada’s property and casualty insurers. Trillium should provide valuable guidance on this crucial topic and will likely dictate whether any appeal from this case proceeds.

In the meantime, it is summer storm season in Canada and extreme weather events continue their march across the country, all of which will test the ability of insurers to limit their replacement cost exposure to stated sublimits for wind, water and by-law enhancements.

 

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