Volume XXVIII, No. 8 (No. 733)
Friday, September 25, 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.
This week’s issue is attached. No surprise there; we always attach them. It’s our 733rd time doing so!
Happy Autumn -- I guess.
I am not an autumn fan. It is not that I object to crisp weather, colorful leaves, or any of the other things that cause people to wax poetic about fall. My problem is that autumn is really just winter’s advance team. Once the leaves start turning, I know we are about six months away from seeing spring again, with the small inconvenience of winter occupying most of the time in between.
There are, admittedly, compensations. It is football season — GO BILLS!, off to a 2-0 start, and hockey season is about to begin. GO SABRES! They remain gloriously undefeated, a record made considerably easier to maintain before the season actually starts.
And there is one other redeeming feature to summer’s demise: the appellate courts are getting back to work. Before long, we should begin seeing decisions in cases argued after the summer recess. So, while others are admiring the foliage, I will be looking for fresh case law and counting the days until spring.
And lucky for me, I haven’t been banned from the White House.
North Carolina Bans Litigation Funding
While states have started to regulate litigation funding companies, North Carolina outright banned them by legislative fiat. There’s an excellent summary of the legislation prepared by the McAngus Goudelock & Courie firm, and I thank them for allowing me to link to it. Congrats to Heather G. Connor and JD Keister for a well-written piece.
Don Myles
Anyone who had the privilege of knowing our friend Don Myles knew what a remarkable person he was—a superb Arizona lawyer, a generous colleague, and simply a great human being.
His passing on June 8, after a years-long battle with cancer, was heartbreaking to so many of us. Today, his celebration of life was held in Phoenix, where hundreds of friends, family members, and colleagues gathered to honor a man who meant so much to so many.
Don, you leave behind countless people who are better for having known you. You lived a good life, a life of accomplishment, friendship, kindness, and character. It was simply far too short.
You will be deeply missed and warmly remembered.
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.
What is an Excess Carrier’s Obligations when a Primary Carrier is Insolvent?
On September 21, the Colorado Supreme Court held that an excess carrier does not step into the shoes of an umbrella carrier to pay first dollar coverage when the primary carrier goes belly-up. The case is A.R. Wilfrey & Sons v. Nat’l Union Fire Insurance Co. of Pittsburgh, PA and it’s a good read. It rejected the argument that the claims were “not covered” by the primary policy.
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.
Pretty Light Sentence – 100 Years Ago:
Buffalo Courier Express
Buffalo, New York
25 Sept 1926
MRS. NAGLE IS SENT
TO AUBURN PRISON,
THREE TO FIVE YEARS
Pleads guilty to manslaughter,
Reduced from murder charge –
Other sentences.
Mrs. Margaret Nagle, who last May 8th fatally stabbed her husband, Patrolman Timothy J. Nagle, in a family row at their home, 2001 Seneca street, was sentenced to Auburn prison for three to five years by Justice Lytle in supreme court yesterday. She had pleaded guilty to a manslaughter charge reduce from murder.
Peiper on Property (and Potpourri):
Another week, and another week of being shut out. Nothing of note to report on the first party front. Or, frankly, on the potpourri front. Stay tuned, though, as decisions are surely right around the corner.
In the meantime, Go Bills.
Steve
Steven E. Peiper
[email protected]
Facing the Dead – 100 Years Ago:
Buffalo Courier Express
Buffalo, New York
25 Sept 1926
Man’s Face Grows
On His Tombstone
Ashland, Ky., Sept. 24 – The outlines of a man’s face are appearing on the tombstone over the grave of John Foltz, in the graveyard on the farm of Nando Selty, near Summit, this county. People living near the burial grounds are excited.
Some days ago, there appeared outlines of a human head, then came eye, nose, and mouth, worked out in shadowy lines on the stone. Then it became so plain as to be seen some distance.
The man buried under the stone was killed in an accident in 1891.
Lee’s Connecticut Chronicles:
Dear Nutmeggers:
Time, once again, seems to be in short supply at this time of year, especially as a Jewish lawyer. The early fall presents a familiar—and frantic—collision of calendars. The High Holy Days arrive just as courts, clients, carriers, and opposing counsel return in full force from summer, bringing hearings, mediations, discovery deadlines, and the steady stream of “urgent” emails. Rosh Hashanah calls us to take stock; Yom Kippur asks us to step away, reflect, and seek forgiveness; Sukkot and Simchat Torah extend the season into a series of observances that can make an ordinary workweek feel like a carefully negotiated coverage schedule. The result is an annual exercise in disciplined planning: advance notices to colleagues and clients, early filing where possible, reliable out-of-office coverage, and a recognition that some matters truly can wait a day.
There is a useful professional lesson in the season’s demands. The High Holy Days emphasize accountability, repair, community, and the importance of pausing before responding principles that translate surprisingly well to the practice of law. Even amid the press of deadlines, the season reminds us that being responsive does not require being perpetually available, and that thoughtful preparation is usually better than last-minute crisis management. Balancing our professional obligations with synagogue services, family time, and holiday observances, the fall calendar is busy indeed—but it also offers a welcome opportunity to reset priorities before the year’s final sprint.
Until next edition, keep keeping safe.
Lee
Lee S. Siegel
[email protected]
Didn’t Ask Me for MY Opinion – 100 Years Ago:
Rochester Journal and the Post Express
Rochester, New York
25 Sept 1926
ADVICE TO THE
LOVELORN
By Beatrice Fairfax
Raymond is undecided as to which of two young women he should give preference in his friendship. His problem is universal.
Do we not all of us from time to time face the question of what should be cultivated, what discarded among our opportunities for friendship and social life? It’s impossible to follow up every pleasant acquaintance in this crowded age.
Then, too, it’s well to look to the end. If we always chose friends wisely, we would save ourselves much bitter disappointment and find life richer in beauty and good.
“Dear Miss Fairfax,” writes Raymond.
“I am nineteen. I am going with two girls. Both are about eighteen. One appears to be rather cold or slow. She is not fond of necking or petting parties, but is very fond of sports, such as swimming and ice skating. Her letters are far from mushy.
“The other girl writes mushy letters. She’s fond of petting and kissing parties. In her letters, she says she would do anything to please me. Will you please advise me as to which girl I should think more of?”
Of course you realize, Raymond, that you are free to cultivate the friendship of both these girls, and of others as well, provided you like them and consider them worthwhile and they also find you congenial. You are not engaged, not likely to become engaged for several years.
The larger your circle of worthwhile friends among girls of various temperaments the more likely you are to choose a wife wisely later on. For you will understand young women as companions and friends.
As to the question of which of these two girls will prove a finer, more dependable friend, ask yourself which of the two you would be the more proud of as a sister. Which would you like better to introduce to your mother? With which of the two would you prefer to have a loved sister chum? Answering these questions may clear away confusion in your mind.
If both girls pass this test, why do you not keep them both for friends if you like them? You are very wise to think well before making new friends. Then, when do you form a friendship, be loyal in word, thought, and deed.
Ryan’s Federal Reporter:
Hello Loyal Coverage Pointers Subscribers:
The first two weeks of fantasy football is in the books, and my redraft teams have been hit by the injury bug—hard. Zay Flowers, Malik Nabers, Nico Collins, Michael Pittman, Jaxson Dart, RJ Harvey among the ailed. It’s good to face adversity early in the season, right? Do I see the light in Week 3? Only 1-1 so we are not off the rails yet. But check back soon.
This edition, my column tackles an important question: Can you waive an exclusion that was already waived in a sublimit endorsement?
Until next time,
Ryan
Ryan P. Maxwell
[email protected]
Popular Suits, Back in the Day – 100 Years Ago:
Rochester Journal and the Post Express
Rochester, New York
25 Sept 1926
BEATRICE LILLIE IS
SUED OR BALM
By Associated Press
LOS ANGELES, Sept. 24. – Beatrice Lillie, also known as Lady Peele, English musical comedy star and now engaged in film work in Hollywood, has been named defendant in an alienation of affections suit for $100,000 and co-respondent in an action for separate maintenance filed here by Mrs. Priscilla Whelan against Timothy E. Whalen, scenario writer.
Storm’s SIU:
Hi Team:
One interesting case this edition:
- In Civil Insurance‑Fraud Litigation with Parallel or Closely Analogous Criminal Exposure, a Non‑Party Witness Can Validly Invoke the Fifth Amendment at a Deposition Where Answers Would Present Substantial, Real Hazards of Incrimination, Including by Furnishing Links in a Potential Prosecution.
Happy Fall and the start of MLB playoffs!
See you in two weeks!
Scott
Scott D. Storm
[email protected]
So There – 100 Years Ago:
The Montgomery Advertiser
Montgomery, Alabama
25 Sept 1926
SLAYER OF HUSBAND GETS
‘JUSTIFIABLE’ VERDICT
Coroner’s Jury Absolves Wife for
Killing Quarrelsome Mate
CHICAGO, Sept. 24. – (AP)- Mrs. Marguerit Delveaux, who shot her husband to death and then walked to the police station and declared herself “completely happy,” was absolved today by a coroner’s jury which returned a verdict of “justifiable homicide.”
She testified she was goaded to the killing by her husband’s constant abuse through 28 years of married life. After the verdict, the woman’s three sons. Ranging from 15 to 25 years of age, kissed her and scores of women pressed forward to congratulate her.
Fleming’s Finest:
Hi Coverage Pointers Subscribers:
With the start of the new season, the mornings have been getting crispier and the days shorter. This week, as I looked at the first bits of yellow on the trees at the park, I couldn’t help but wonder: is it finally time to pay the $20 to pick the apples myself?
No case this edition. The courts have been pretty quiet.
See you in a fortnight,
Kate
Katherine A. Fleming
[email protected]
Imagine a Trial Over Groceries Today – 100 Years Ago:
Elmire Star-Gazette
Elmira, New York
25 Sept 1926
IS AWARDED VERDICT
A verdict of $23.50 for the plaintiff in the action of Harry S. Berlin against Harry Swartwood was handed down by Judge Lynch in City Court after he had heard the evidence in the case Friday afternoon. The suit was instituted to collect $25.79 alleged due for a quantity of groceries Attorney Charles O. Eacker appeared for the plaintiff.
Gestwick’s Garden State Gazette:
Dear Readers:
Happy Fall! My favorite season. My wife and I started it off right with a tour of the new Highmark Stadium last weekend. It is every bit what it is cracked up to be. Several atria, over 900 television screens, luxury buffet dining, rotating bars, and adequate restrooms (a step up from the last stadium)—it leaves nothing to be desired. The tour consisted of a walk around each level of the stadium, into the suites, and then down into the locker room, media room, coaches’ offices, training facilities, and finally, onto the field. Once at field level, the guides asked our group of 29 people to shout “Go Bills” to demonstrate how the canopy system works to reflect sound from the stands back onto the field. They told us that the stadium holds roughly 2,100 times our group size. The echo from just the 29 of us was quite impressive—I can’t imagine what 2,100 times that noise is like on game day. That experience and the Bills’ 2-0 start have helped quell my sorrows over the Blue Jays’ official elimination from playoff contention yesterday. After going seven games with the Dodgers in the World Series, and coming about as close as a team can come without actually winning it (and not making any drastic changes to the roster or coaching staff), I am left wondering how we got all the way back down here.
The cases I have for you this week are separate, but related. The first is a Supreme Court case (admittedly, from July—I missed it when I took one edition off for my wedding), which ruled that the statute that makes arbitration of PIP claims mandatory does not apply when an insurance fraud claim is asserted. The second considers whether that ruling entitles an insurer to an enjoinment of a PIP arbitration in that situation. Read on for the analysis.
That’s all I have—see you in two weeks (when I will officially be a homeowner!)
Evan
Evan D. Gestwick
[email protected]
Bread and Water Sentences – 100 Years Ago:
Elmira Star-Gazette
Elmira, New York
25 Sept 1926
Judge to Continue
Sentences After
Trying Bread Diet
Hartington, Neb., Sept. 25. – Liquor law violators wo come before County Judge Wilbur F. Bryant will continue to receive bread and water sentences. The 75-year-old judge, who has completed a five-day test of the diet he has imposed for years, said today he would dole out the sentences on a graduated scale to fit the offense.
Judge Bryant said he will eat sparingly for the rest of his life. He lost 10 pounds while dieting.
“I feel as light as a cork and can walk rapidly and never was in better health in my whole life,” he said. “I have suffered not exactly from hunger but from longing for the food which I was used to as an epicure. But abstinence agrees with me so well that I am resolved on stinting my diet for the rest of my natural life.”
O’Shea Rides the Circuits:
Readers,
Autumn is upon us. As my colleagues write regarding festivals, football, and apple picking, I submit that apple cider and donuts are the true highlights of the season. Those items as well two large dog-bear hybrids pillaging piles of leaves.
This week I have quick case from the Third District regarding potential illusory coverage in a D&O policy.
Until Next Time,
Ryan
Ryan P. O’Shea
[email protected]
Not Rochester's Best Day – 100 Years Ago:
Rochester Journal and the Post Express
Rochester, New York
25 Sept 1926
KLAN TO PARADE IN
E. ROCHESTER TONIGHT
East Rochester was the mecca of the Ku Klux Klan today, with thousands of members of the hooded over scheduled to attend the “konvocation” which was to open in a big field at Ivy and Washington Streets tonight and continued tomorrow.
The burning of an immense cross in the field tonight, a parade of the Klansmen through the streets of the village, starting at 6 o’clock, speeches outlining the beliefs and plans of the order – all of these are on the program.
A stage has been built in the field and electric light wires have been strung to it.
The Klansmen say they expect the gathering to be the largest held in this section of the state.
Police Chief Legge has made careful plans to preserve order, as word was received that enemies of the Klan might go from Rochester to “start something.” In addition the sentries of the Klansmen will maintain close watch over visitors.
LaBarbera’s Lower Court Library:
Dear Readers:
Fall is here, and already my weekends are full. Looking forward to getting one final Fall harvest and wildflower bouquet before the preparation for Winter begins.
This week I have another case involving claims asserted against a broker. In this one, the County of Westchester granted the broker’s motion to dismiss, in full, based on the failure to demonstrate a specific request was made, or a special relationship between the parties.
Until next time…
Isabelle
Isabelle H. LaBarbera
[email protected]
Silk Thief – 100 Years Ago:
The Buffalo News
Buffalo, New York
25 Sept 1926
SILK IN SUITCASE OF
WIFE OF EX-DICTATOR
ATHENS, Sept. 24. – An official investigation is being conducted into the activities of Madam Pangalos wife of the former Greek dictator, it was revealed yesterday, the day after Pangelos fall from power, three suitcases addressed to Madam Pangelos were taken from a steamship reaching Pireus from Marseilles by customs officials.
The suitcases contained silk goods valued at $500 and were liable to heavy duty, it is charged. Customs officers said this was not the first time suitcases had arrived for her, but hitherto they had been allowed to pass without inspection. Called into court, Madam Pangalos told the judge her milliner in Paris was to blame for the presence of the silk.
Lexi’s Legislative Lowdown:
Dear Readers,
I have convinced my husband to put a pause on the home construction and attend one of my favorite yearly traditions: the Grape Festival. My favorite part is the grape pie, which is made with concord grapes, my favorite type of grape. Since I discovered grape pies they have been my favorite (even over apple). I have many memories from late September that revolve around the Grape Festival and grape pie. The one that sticks out the most is enjoying grape pie with my college friends in our dorm celebrating the completion of my first half marathon. Needless to say, looking forward to all things grapes this weekend.
This week we discuss a newly introduced bill that would prohibit homeowners’ insurers from considering credit history when deciding whether to issue, cancel, renew, price, or structure payment terms for a policy. We will continue to monitor A11725 as it moves through the Assembly Insurance Committee.
Thanks for reading,
Lexi
Lexi R. Horton
[email protected]
A Marriage Market – 100 Years Ago:
The Buffalo News
Buffalo, New York
25 Sept 1926
MARRIAGE MARKET
OPENS WITH BALL
LONDON, Sept. 24. – Greatly concerned over the problem of its 2000 surplus women, the small town of Wallasay in Cheshire is planning a “matrimonial ball” to which all of England’s unattached young men would be invited. Mayor Holdsworth recently described Wallasay as “England’s best marriage market” and advised eligible men to pass their vacations there.
Victoria’s Vision on Bad Faith
Dear Readers,
This weekend I am headed to Wyoming, New York, to attend the AppleUmpkin Festival (which also happens to coincide with the Grape Festival my friend and colleague above keeps asking me to go to but alas). I'm looking forward to apples, pumpkins, and fall arts and crafts stands. The goal is to find some fall decorations to complement the four mums and two pumpkins I've gotten so far for my deck.
Have a good weekend!
Victoria
Victoria S. Heist
[email protected]
Buffalo Opens its Airport – 100 Years Ago:
The Buffalo News
Buffalo, New York
25 Sept 1926
Solidly, Substantially, a Great
New Business Era Dawns
To BUFFALO – “Axis of Aviation”
This week Buffalo takes its proud place on the rapidly developing air maps of the world. Buffalo’s Airport marks it there – indelibly – for all future time. The Mayor and Council of our city have now provided Buffalo with what will presently be recognized, far and wide, as the finest municipal airport development to date in the United States. September 25th the cornerstone of tis far-reaching civic project will be laid. The curtain is now raised. Business men of Buffalo. It is ow squarely up to you!
Shim’s Serious Injury Segment
Hi Readers,
Hope everyone has been well since our last column. Since then, we have officially welcomed fall. In the lower New York area, it certainly feels that way with cooler temperatures in the low 60s and breezy weather. The NFL has kicked into gear, pumpkin and apple picking is back and the MLB Postseason is set to begin in just five days. Fall is truly in the air. I am very much looking forward to an afternoon of pumpkin picking and enjoying some cider doughnuts in the near future. Happy Fall!
This issue, I have shared an appeal decided by the Appellate Division, Second Department, which affirmed the Supreme Court’s denial of appellant’s petition to vacate a master arbitrator's award in connection with a motor vehicle accident.
See you in the next issue!
Stephen
Stephen M. Shimshi
[email protected]
Do What I Say, Not What I Do – 100 Years Ago:
The Post-Star
Glens Falls, New York
25 Sept 1926
Ex-Dry Director
Indicted With 22
For Violation Plot
ERIE, Pa., Sept. 24 (AP) – Arthur McKean, former state prohibition director, and 22 others were indicted in federal court here today charged with conspiracy to violate the national prohibition law.
The indictments were returned in connection with an investigation of 45,000 gallons of whiskey from the bonded warehouse of the Joseph Finch company at Pittsburgh in 1921.
Indicted with McKean was Samuel B. Wolfe, former assistant state prohibition director.
A number of the defendants were named in a similar indictment returned in Pittsburgh in 1924 but subsequently quashed because of alleged irregularities in presentation of the case before a federal grand jury.
New England Almanack
The wheel turns, and it’s autumn. Crisp nights, bright days, and the annual festival of the leaves changing brings with it a quickening of the pulse. The courts have awoken from their late-summer slumber and are beginning to clear backlogs of decisions. And we are here to report on it.
In this issue, we bring you an auto-insurance case involving questions of Rhode Island law, which was just disposed of by the First Circuit after receiving an answer to a certified question from the Rhode Island Supreme Court. The federal appeals court turned back a number of alternative arguments attempting to avoid the result that the Rhode Island state court of last resort had determined.
If you decide to come leaf-peeping, we recommend Smolak’s Farm in North Andover, Massachusetts, or the farmstand at Mack’s Apples in Londonderry, New Hampshire, as two the best spots to get cider donuts.
Until next time!
Barbara
Barbara A. O’Donnell
[email protected]
Alex
Alexander G. Henlin
[email protected]
Iryna
Iryna N. Dore
[email protected]
Love the Phone Numbers – 100 Years Ago:
The Post-Star
Glens Falls, New York
25 Sept 1926
MY RADIO STORE
IS AGAIN OPEN FOR
THE SEASON
With a full line of up-to-date Radio Sets and Accessories. Repairs and adjustments on all makes of Radios. Agent for Universal Plio 6, all wave lengths Erla and Kodel Radios, Farrand Cone Speakers; reasonable prices. Demonstrations every evening.
PHONES 7 AND 1798-W
J. ALLEN CLARK
Cor. Lawerence and Pearl Sts.
Glens Falls, N.Y.
North of the Border:
This week takes me to Vancouver for a mediation on a coverage claim, with the Right Honourable Beverley McLachlin as our mediator. It will be my third time appearing before her: First in the Supreme Court of Canada before the full panel, later when she sat as one of three arbitrators after her retirement from the Court, and now in mediation. Few counsel get one such opportunity, let alone three, and I remain conscious of what an honour it is.
There is also something fitting about it. A jurist who spent seventeen years as Chief Justice of Canada shaping how this country decides disputes now spends her time helping parties resolve them without a decision at all. That progression says something useful about where insurance coverage disputes are actually headed.
My column this week discusses an Ontario Court of Appeal decision on a cross border cyber policy where the Ontario decision is contrary to Texas.
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]
- Claims Against Insurer for Failing to Pay Appropriate Damages for Collision Claim Withstand Motion to Dismiss. While Claims Handling Regulations and Statutes Do Not Provide a Private Cause of Action, Claims for Unpaid Repairs Are, Practically, a Claim for Breach of Contract. Proof Submitted by Carrier That it Paid Right Amount, Fails on Hearsay
- Carrier Brought Application to Stay Uninsured Motorist Arbitration with Application Granted by Default. Insufficient Proof to Set Aside That Default
PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper
[email protected]
- Nothing of note to report this week.
LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel
[email protected]
- Carrier Cannot Limit UM/UIM Coverage to Owned Vehicles Only
- Bad Faith Count Survives Dismissal Where it Alleged Specific Facts
RYAN’S FEDERAL REPORTER
Ryan P. Maxwell
[email protected]
- An Insurer Cannot Waive an Exclusion Already Expressly Waived by Endorsement Instituting a Sublimit for the Previously Excluded Claims
STORM’S SIU
Scott D. Storm
[email protected]
- In Civil Insurance‑Fraud Litigation with Parallel or Closely Analogous Criminal Exposure, a Non‑Party Witness Can Validly Invoke the Fifth Amendment at a Deposition Where Answers Would Present Substantial, Real Hazards of Incrimination, Including by Furnishing Links in a Potential Prosecution
FLEMING’S FINEST
Katherine A. Fleming
[email protected]
- Nothing from me this week; see you in a fortnight.
GESTWICK’S GARDEN STATE GAZETTE
Evan D. Gestwick
[email protected]
- Supreme Court Agrees That PIP Claims Are Not Subject to Mandatory Arbitration When Insurance Fraud Prevention Act Claims Are Asserted
- Court Refuses to Enjoin PIP Arbitration in Wake of Supreme Court’s Ruling That PIP Arbitration Is Not Mandatory When Insurance Fraud Protection Act Claims Are Asserted
O’SHEA RIDES the CIRCUITS
Ryan P. O’Shea
[email protected]
- D&O Policy Not Illusory Despite Broad Ownership Percentage Exclusion
LABARBERA’S LOWER COURT LIBRARY
Isabelle H. LaBarbera
[email protected]
- Court Grants Broker’s Motion to Dismiss Based on Lack of Specific Request and Special Relationship
LEXI’S LEGISLATIVE LOWDOWN
Lexi R. Horton
[email protected]
- Proposed Legislation to Prohibit the Use of Credit History in Homeowners’ Insurance Underwriting, Rating, Cancellation, and Renewal Decisions.
VICTORIA’S VISION ON BAD FAITH
Victoria S. Heist
[email protected]
- Pennsylvania Court Grants Insurer's Summary Judgment Motion Dismissing Bad Faith Allegations
SHIM’S SERIOUS INJURY SEGMENT
Stephen M. Shimshi
[email protected]
- Appellate Division Affirms Denial of Petition to Vacate a Master Arbitrator's Award in Connection With a Motor Vehicle Accident
NEW ENGLAND ALMANACK
Barbara A. O’Donnell
Alex G. Henlin
Iryna N. Dore
- The First Circuit Court of Appeals Denied Plaintiff’s Desperate Arguments of a Waiver and a Failure to Comply with the Statutes Following Rhode Island Supreme Court’s Finding That Limitation of UM/UIM Coverage to Persons “Occupying” a Covered “Auto” Does Not Violate Rhode Island Law
NORTH of the BORDER
Heather A. Sanderson, K.C.
Sanderson Law
Calgary, Alberta, Canada
[email protected]
- Ransomware Coverage Cannot Be Chosen À La Carte: Ontario’s Appellate Court Gives a Ransomware Endorsement its Full Effect, and a US$2 Million Cyber Loss Becomes Wholly Self-Insured
Happy Autumn
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, New Jersey, and across New England.
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]
09/23/26 Prospect Auto Sales and Repairs, Inc., v. State Farm Mutual Appellate Division, Second Department
Claims Against Insurer for Failing to Pay Appropriate Damages for Collision Claim Withstand Motion to Dismiss. While Claims Handling Regulations and Statutes Do Not Provide a Private Cause of Action, Claims for Unpaid Repairs Are, Practically, a Claim for Breach of Contract. Proof Submitted by Carrier That it Paid Right Amount Fails on Hearsay
State Farm issued an insurance policy to Sukhram for her 2018 Audi) for the policy period of September 11, 2022, to March 11, 2023 (“policy”). On February 20, 2023, the vehicle sustained damage as a result of an accident. Sukhram filed a claim with the State Farm for insurance benefits under the collision section of the policy.
Thereafter, on February 22, 2023, Sukhram brought the vehicle to the Prospect to have the vehicle repaired and restored to its pre-accident condition. In connection therewith, Sukhram executed a repair authorization and a designated representative authorization, allowing Prospect to repair the vehicle and to negotiate with the State Farm regarding the cost and payment for such repairs. In addition, Sukhram executed an assignment of claim, assigning to the Prospect all rights as against the State Farm for any damages arising out of State Farm’s failure to pay for the total cost of the repairs.
Prospect repaired the vehicle as requested by Sukhram, returning it to its pre-accident condition, at a cost of $19,736.60. However, the State Farm paid the Prospect only $13,188.22 for the subject work.
This suit followed with Prospect claiming that State Farm had an obligation under the policy to indemnify Sukhram for the reasonable and necessary repairs made to the vehicle as performed by the repair facility of her choice, (2) accepted full responsibility for payment for such repairs and entered into negotiations with the Prospect f regarding the specific cost of such repairs, and (3) had a duty under Insurance Law § 2601 and Regulation 64, Part 216, and the policy to negotiate in good faith with the Prospect to repair the vehicle.
In that regard, the plaintiff alleged further that the defendant had violated, inter alia, Insurance Law § 2601 and 11 NYCRR 216.7 and breached the policy by failing to negotiate with the plaintiff in good faith, including regarding the procedures, parts, materials, and costs thereof necessary to return the vehicle to its pre-accident condition, and by failing to pay the plaintiff in full for all such necessary repairs.
The Prospect sued for $6,548.38, the difference between the $19,736.60 total cost of the repairs and the $13,188.22 paid to it by the defendant.
The defendant moved for summary judgment dismissing the complaint, contending, among other things, that there is no private right of action under Insurance Law § 2601 and 11 NYCRR 216.7.
The appellate court held that under a fair reading of the complaint, it does not set forth a cause of action to recover damages for violations of Insurance Law § 2601 and 11 NYCRR 216.7 but rather properly seeks to recover damages for breach of contract predicated, in part, on allegations of such.
Further, State Farm failed to establish its prima facie entitlement to judgment as a matter of law dismissing the complaint. State Farm argued that it did not breach the policy and, in fact, paid the plaintiff in full for all necessary repair work, since, in accordance with the policy, it paid the plaintiff based on its own repair estimate written upon the prevailing competitive rate, as determined by a survey it prepared.
The Second Department found that the argument in that regard is wholly conclusory and unsubstantiated, as it never furnished the survey it purported to rely upon. Further, to the extent an affidavit of a State Farm representative submitted in support of the motion addressed the issue as to whether the defendant negotiated with the plaintiff in good faith regarding the procedures, parts, materials, and costs to return the vehicle to its pre-accident condition, the affidavit is not based on personal knowledge but rather improperly relies on hearsay within hearsay.
09/23/26 In the Matter of Hartford Fire Insurance Company v. Villanueva
Appellate Division, Second Judicial Department
Carrier Brought Application to Stay Uninsured Motorist Arbitration with Application Granted by Default. Insufficient Proof to Set Aside That Default
Hartford Fire Insurance Company (“Hartford”), commenced this proceeding, to permanently stay arbitration of a claim by Devorah Villanueva for uninsured motorist benefits arising out of an alleged hit-and-run collision in February 2022 involving Villanueva, who was riding a motorized scooter, and an unidentified motorcyclist. In an order dated June 1, 2023, the Supreme Court directed Villanueva to serve written opposition to the petition by June 15, 2023, and adjourned the petition to June 22, 2023. Villanueva failed to submit written opposition to the petition. Thereafter, in an order dated June 22, 2023 (hereinafter the June 2023 order), the court granted that branch of the petition which was to permanently stay arbitration upon Villanueva's default, in effect, in opposing the petition.
In August 2023, Villanueva moved, among other things, pursuant to CPLR 5015(a)(1) to vacate the June 2023 order which Hartford opposed.
To obtain relief ,Villanueva was required to show both a reasonable excuse for the default and a potentially meritorious defense to the action. Here, Villanueva failed to proffer a reasonable excuse for the default. Villanueva's conclusory and unsubstantiated assertions that she was hampered in opposing the petition by the lack of production of certain medical records and a purported police report did not constitute a reasonable excuse, as she provided no explanation as to efforts made to obtain those documents. Since Villanueva failed to demonstrate a reasonable excuse for the default, it is unnecessary to consider whether she demonstrated a potentially meritorious defense to the petition.
PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper
[email protected]
Nothing of note to report this week.
LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel
[email protected]
09/18/26 Kennedy v. Nationwide Gen. Ins. Co.
United States District Court, District of Connecticut
Carrier Cannot Limit UM/UIM Coverage to Owned Vehicles Only
The court denied Nationwide's motion for summary judgment because although its commercial auto policy purported to limit UM/UIM coverage to owned vehicles only, the injured driver would have been entitled to liability coverage while driving a leased vehicle with the insured’s permission, pursuant to the policy's Symbol 8 coverage for hired/leased vehicles. Connecticut law prohibits withholding UM/UIM coverage from persons entitled to liability coverage.
Incline Indemnity's motion for summary judgment was granted because its commercial policy issued to Mid-South, with a certificate of insurance to Jay's Transport LLC, covered only the specifically described 2014 Freightliner for both liability and UM/UIM. The decedent was driving the leased vehicle, a Ford Ranger, not listed on the policy at the time of the accident. Accordingly, the decedent would not have been entitled to liability coverage while driving that unlisted vehicle, so Connecticut's parity requirement was not violated.
09/11/26 Jinjika v. Hanover Ins. Grp.
Superior Court of Connecticut, Hartford
Bad Faith Count Survives Dismissal Where it Alleged Specific Facts
The Superior Court denied Hanover Insurance's motion to strike the Jinjika plaintiffs' common-law bad faith claim because the complaint specifically alleged that Hanover denied contractual benefits without justification, knowingly and intentionally causing delay with the conscious purpose of securing a financial advantage for itself. This, the court held, sufficiently pleaded dishonest purpose beyond mere negligence, even under the more stringent 'specific allegations' approach to bad faith pleading. “The allegations are sufficient to plead that the defendant's denial of the [*12] plaintiffs' claim was not mere negligence, because the allegations assert that the denial was instead the result of a conscious decision intended to create financial advantage to the defendant to the detriment of the plaintiffs. In other words, read in the light most favorable to the plaintiffs, the allegations of count four assert that the defendant was not simply mistaken in its denial of the claim, but that it intended to enhance its own financial position by denying the plaintiffs' claim.”
The court struck the insured’s CUTPA/CUIPA claim, finding that the allegations were nothing more than bald assertions. “Moreover, subparagraph (a) of Paragraph 22 is conclusory and does not allege any particular misconduct beyond the improper failure to pay insurance benefits. Accordingly, the plaintiffs have not sufficiently alleged a general business practice of the kind described in subparagraph (h) of Paragraph 21.”
The court struck the insured’s negligent adjustment claim, in reliance on the economic loss doctrine, which bars contract claims disguised as tort claims.
RYAN’S FEDERAL REPORTER
Ryan P. Maxwell
[email protected]
09/18/26 Homesite Ins. Co. v. WWMD Corp., et al
United States District Court, Eastern District of New York
An Insurer Cannot Waive an Exclusion Already Expressly Waived by Endorsement Instituting a Sublimit for the Previously Excluded Claims
Homesite Insurance Company issued a commercial general liability policy to WWMD Corp. d/b/a Kelly’s Pub for July 20, 2023–July 20, 2024, with limits of 1 million per occurrence and 2 million aggregate. The policy contained both an Assault and Battery exclusion, and an Assault and Battery Extension of Coverage Endorsement, which expressly waived the Assault and Battery Exclusion, but subjected such claims to a $100,000 sublimit.
On September 24, 2023, Elliot Ortiz’s father was fatally stabbed at Kelly’s Pub by another patron, Jason Schuler. Homesite’s underwriting manager learned of the incident from a news report two days later and contacted WWMD’s insurance agent, who described the incident. WWMD did not submit a claim at that time.
Ortiz filed a wrongful death/bodily injury suit against WWMD and Schuler in Queens County Supreme Court on June 27, 2024. On July 18, 2024, Homesite sent WWMD a Reservation of Rights Partial Coverage Disclaimer, agreeing to defend but reserving rights, including reliance on the $100,000 assault-and-battery sublimit.
After the parties could not agree on Homesite’s liability under the policy, Homesite filed this federal declaratory judgment action seeking a ruling that the assault-and-battery sublimit caps coverage for the underlying suit at $100,000. Ortiz counterclaimed for breach of contract, asserting coverage up to the full policy limits and WWMD did not appear.
The parties agreed the policy’s Assault and Battery Endorsement reinstated coverage for assault-and-battery injuries up to $100,000, but disagreed whether Homesite’s alleged untimely “disclaimer” barred it from relying on that sublimit under New York Insurance Law § 3420(d).
The court explained § 3420(d) requires timely notice when an insurer disclaims liability or denies coverage based on an exclusion and that if the dispute centered on the assault-and-battery exclusion, a timely disclaimer would be required. However, Homesite was not invoking an exclusion, it had waived the exclusion via the endorsement’s sublimit and conceded coverage existed, with the only question being the amount available. The sublimit extends coverage up to $100,000 and therefore is not an exclusion triggering § 3420(d). The endorsement’s text and structure confirmed this: the exclusion subsection is labeled “Exclusion,” while the sublimit subsection is not and operates to provide, not withdraw, coverage. Because relying on a coverage-limiting sublimit is not a disclaimer or denial of coverage, § 3420(d) did not apply. Homesite had offered the full measure of coverage available under the endorsement—$100,000—so timeliness arguments about a “disclaimer” were immaterial.
Maxwell’s Minute: Kudos to Bob Cosgrove and Jason Laicha from Wade Clark Mulcahy on this decision. There does appear to be something poetic about arguing that an insurer cannot waive an exclusion that was already expressly waived in the policy through imposition of a sublimit for the previously excluded claims.
In the immortal words of Harry Dunne: “No, you can't do that... you can't triple stamp a double stamp, you can't triple stamp a double stamp!”
STORM’S SIU
Scott D. Storm
[email protected]
09/08/26 Great Am. Ins. Co. v. Gemstone Property Management, LLC
U.S. District Court for the Southern District of New York
In Civil Insurance‑Fraud Litigation with Parallel or Closely Analogous Criminal Exposure, a Non‑Party Witness Can Validly Invoke the Fifth Amendment at a Deposition Where Answers Would Present Substantial, Real Hazards of Incrimination, Including by Furnishing Links in a Potential Prosecution
In civil insurance‑fraud litigation with parallel or closely analogous criminal exposure, a non‑party witness can validly invoke the Fifth Amendment at deposition where answers would present substantial, real hazards of incrimination, including by furnishing links in a potential prosecution. A court will consider the broader litigation environment (e.g., related RICO/fraud suits), the nature of the questions, and any in camera submissions in evaluating reasonableness.
Great American Insurance Company moved under Fed. R. Civ. P. 37(a) and 45 to: (1) compel non‑party Jose Hernandez to answer deposition questions to which he invoked the Fifth Amendment, and (2) compel non‑party J. Hernandez Associates, Jr., Inc. to produce documents.
Great American alleges it was targeted by a large insurance fraud scheme purportedly orchestrated by the law firm Subin Associates, LLP, involving staged construction‑site accidents, unnecessary medical procedures, litigation funding, and following tort suits; one such suit by Luis Manuel Garcia Salcedo ended in a $6 million settlement that Great American claims was fraudulently procured. The Court referenced prior opinions in the same litigation detailing these allegations.
Great American contends Hernandez was an assistant manager at Subin Associates; that he and Hernandez Associates transported Subin clients to medical appointments; that Hernandez Associates shared office space with Subin (14th floor, 150 Broadway); and that Hernandez owned/operated two litigation funding entities (Wall Street Case Advances and Corona 55) that also shared that office space.
On February 13, 2026, Great American served a Rule 45 deposition subpoena on Hernandez and a Rule 45 document subpoena on Hernandez Associates. Hernandez was deposed on June 4, 2026; after answering preliminary background questions, he invoked the Fifth Amendment to decline to answer questions about, among other things, his employment, his affiliations with the above entities, his knowledge of individuals/documents tied to the alleged scheme, and whether he worked in Subin’s building. Great American ended the deposition after less than an hour.
The Court noted multiple state and federal suits alleging Subin’s involvement in a wide‑ranging fraud and RICO scheme; Hernandez and Hernandez Associates are named as defendants in at least one of those cases. The Court cited these matters in assessing the reasonableness of Hernandez’s fear of prosecution.
The issues included whether the Court should compel Hernandez, a non‑party deponent, to answer questions over his Fifth Amendment privilege invocation; and whether the Court should compel Hernandez Associates to produce documents in response to the Rule 45 subpoena.
The Fifth Amendment privilege applies in civil proceedings when a witness reasonably believes answers could be used in a criminal prosecution or lead to evidence that could be so used; courts cannot compel answers over a valid assertion absent duly authorized immunity. The privilege covers answers that would directly support a conviction or furnish a link in the chain of evidence. A witness must face substantial, real hazards of incrimination; mere say‑so is insufficient, and the court evaluates the incriminating nature of questions in context, guided by the judge’s perception of the case’s peculiarities.
The Court found Hernandez’s apprehension of criminal exposure was substantial and real, not imaginary. The alleged scheme (if proven) would implicate federal and state crimes, including mail fraud (18 U.S.C. 1341), wire fraud (18 U.S.C. 1343), racketeering (18 U.S.C. 1961), and money laundering (18 U.S.C. 1956–57), with potential liability as a principal, aider/abettor (18 U.S.C. 2), or co‑conspirator (18 U.S.C. 371, 1349). Multiple civil suits (including RICO) were pending against Subin Associates, and at least one named Hernandez and his company, further supporting the risk of prosecution. Hernandez also submitted an ex parte declaration reviewed in camera that, together with other evidence the plaintiff developed about his roles and office arrangements, convinced the Court that his fear of prosecution was far from speculative.
The Court emphasized Hernandez did not assert a blanket privilege. He refused answers only to questions whose responses could provide a link in a chain of incriminating evidence—e.g., employment, affiliations with relevant entities, identities/relationships with alleged participants, presence at the Subin office, and knowledge of documents tied to the Salcedo case—topics tightly intertwined with the alleged fraud. That targeted assertion comported with precedent allowing invocation regarding relationships to core entities and knowledge of an alleged scheme.
The Court denied without prejudice the motion to compel Hernandez Associates’ production. Although Great American argued in reply that corporations enjoy no Fifth Amendment privilege and unilateral relevance redactions are impermissible, the opening brief’s argument section did not develop a request directed at Hernandez Associates, and the conclusion sought only relief as to Hernandez’s deposition answers. Because Hernandez Associates had not had a fair opportunity to respond to arguments raised for the first time in reply, the Court declined to compel production at this time, inviting renewal after a meet‑and‑confer.
FLEMING’S FINEST
Katherine A. Fleming
[email protected]
Nothing from me this week; see you in a fortnight.
GESTWICK’S GARDEN STATE GAZETTE
Evan D. Gestwick
[email protected]
07/21/26 Allstate N.J. Ins. Co. v. Carteret Comprehensive Med. Care, P.C.
Supreme Court of New Jersey
Supreme Court Agrees That PIP Claims Are Not Subject to Mandatory Arbitration When Insurance Fraud Prevention Act Claims Are Asserted
Six related Allstate companies brought this action against several medical practices and physicians, alleging that the latter conspired to fraudulently obtain over $1,700,000 in PIP benefits through fraudulent medical claims. Importantly, Allstate asserted a claim under the New Jersey Insurance Fraud Prevention Act (“IFPA”), which, in part, provides that parties found to have committed insurance fraud may be liable to pay compensatory damages, investigative expenses, costs, attorney’s fees, and possibly, treble damages.
The New Jersey Superior Court (New Jersey’s court of general jurisdiction) dismissed Allstate’s claims and ordered arbitration under New Jersey’s Automobile Insurance Cost Reduction Act (“AICRA”). As relevant here, the AICRA generally requires arbitration—rather than litigation—of all disputes around the recovery of PIP benefits.
Allstate appealed the dismissal of its claims on the basis that arbitration was an inadequate forum to address the plethora of the relief to which it was potentially entitled under the IFPA. According to Allstate, PIP arbitrators, unless judges, lack authority to grant equitable relief, order the broad discovery necessary to prove up fraud claims, or to award compensatory damages, treble damages, or attorney’s fees and costs.
The Appellate Division agreed with Allstate, finding that the claims allowed under the IFPA do not fall within the ambit of PIP arbitration provided for under the AICRA. As the Appellate Division reasoned, while the AICRA structures PIP arbitrations purely to ensure the timely payment of PIP benefits, that arbitration process is not equipped to handle complex insurance fraud claims.
The Supreme Court recently upheld the Appellate Division’s reversal of the Superior Court, noting that while the Third Circuit (the intermediate appellate-level federal court) recently decided that claims under the IFPA are, in fact, arbitrable under the AICRA, the Appellate Division, and thus, the Supreme Court, based the present holding on New Jersey law, and therefore was not bound by the Circuit Court’s decision.
Editor’s Note: This approach seems like the right one. The arbitration process was designed to eliminate expensive, protracted litigation, and to expedite this relatively simple genre of insurance claim. Fraud claims are anything but simple, and, in my humble opinion, are best handled by a court.
09/15/26 State Farm Guar. Ins. Co. v. Tri-County Chiro. & Rehab. Ctr. P.C.
United States District Court, District Court of New Jersey
Court Refuses to Enjoin PIP Arbitration in Wake of Supreme Court’s Ruling That PIP Arbitration Is Not Mandatory When Insurance Fraud Protection Act Claims Are Asserted
The plaintiffs were a group of insurers that made a series of payments as PIP benefits to their insured as a result of certain medical care allegedly rendered by the defendant medical providers. The plaintiffs in this case alleged that said medical providers engaged in a fraudulent scheme to obtain money from them by submitting fraudulent bills, along with documentation for various medical services that were either never provided, or were not medically necessary. In seeking to recover the money they paid to these medical providers, the plaintiffs asserted claims of common law fraud, violations of the New Jersey Insurance Fraud Prevention Act (“IFPA”), aiding and abetting fraud, unjust enrichment, and declaratory judgment.
Before the Court was the plaintiffs’ motion to enjoin all arbitration proceedings. Notably, this case was administratively dismissed in wait of the Carteret decision (above). After Carteret was released, this case was restored, and the plaintiffs’ motions went forward. Essentially, the District Court rejected Carteret’s applicability to the case. In so doing, the Court first noted that while Carteret stands for the proposition that PIP claims cannot be compelled to arbitration when an IFPA claim is asserted, neither party moved to compel arbitration; instead, here, plaintiffs moved to stay or enjoin any pending arbitrations. Second, the District Court noted that Carteret did not address whether pending arbitrations, as here, should be stayed or enjoined. Lastly, the Supreme Court noted that while Carteret explained why PIP arbitration is not ideal in the IFPA context, that Court did not explain how or why monetary damages alone would be inadequate to compensate plaintiffs for harms they faced as a result of fraudulent operations.
Editor’s Note: Two steps forward, one step back? Or, can this opinion be harmonized with Carteret? The Carteret Court noted, albeit in dicta, that while carriers cannot be forced into an arbitration of PIP reimbursement claims where an IFPA claim is at issue, the carriers have the discretion of agreeing to arbitrate such claims anyway. If the ultimate decision belongs to State Farm, and State Farm says they do not wish to arbitrate, it would seem to me that the PIP arbitration should be enjoined under Carteret.
O’SHEA RIDES the CIRCUITS
Ryan P. O’Shea
[email protected]
09/21/26 Sunshine Shopping Ctr., Inc. v. Excess
United States Court of Appeals, Third Circuit
D&O Policy Not Illusory Despite Broad Ownership Percentage Exclusion
Travelers issued Sunshine Shopping Center a Director and Officer Liability Policy in 2023. During the policy’s effective period, three security holders each owning more than 5% of Sunshine’s shares field a derivative suit against Sunshine. Travelers denied coverage for the claim.
The policy provided coverage for Claims, which included a Security Holder Derivative Claim, defined as:
"any Claim brought on behalf of, or in the name or right of [Sunshine] by one or more security holders of [Sunshine] in their capacity(ies) as such," if "brought and maintained without the assistance, participation or solicitation of any member of the board of directors, officer, member of the board of managers, or . . . equivalent thereof."
In contrast, the exclusion relied upon by Travelers, the Ownership Percentage Exclusion (“OPE”) stated the policy did not provide coverage for:
“Loss for any Claim brought or maintained by or on behalf of, or with the assistance, participation, or solicitation of any person or entity that owns or did own more than 5% of the Named Insured."
Sunshine attempted to assert an ambiguity lied in the policy. Specifically, Sunshine argued the OPE applied only to direct claims, not derivative claims. The Court rejected such policy interpretation since the OPE makes no distinction between direct and derivative claims, rather it applies to claims in which security holders act in various ways. Based upon the nature of the suit, the OPE clearly applied to the claims.
Alternatively, Sunshine asserted the policy provided illusory coverage. Sunshine premised its argument that the grant of coverage is rendered a nullity due to the OPE. Yet, the policy’s coverage clearly extended to claims for security holders owning or who never owned less than 5% of Sunshine’s shares, as well several other forms of claims. Therefore, the policy was not illusory since coverage would still apply for the other covered claims.
LABARBERA’S LOWER COURT LIBRARY
Isabelle H. LaBarbera
[email protected]
09/11/26 C&C Operating, Inc. v. American Auto. Ins. Co.
Supreme Court of the State of New York, County of Westchester
Court Grants Broker’s Motion to Dismiss Based on Lack of Specific Request and Special Relationship
C&C Operating, Inc. (the “Insured”) filed an action against American Automobile Insurance Company (“AAIC”), Alliance Commercial (“Alliance”), Pat Mitchell Agency, Pat Mitchell Agency, LLC, and Patricia Mitchell (the “Mitchell defendants”). The Insured alleges that it performs business under the name Emma’s Ale House, in White Plains, New York. It is alleged that prior to May 10, 2023, the Insured engaged the Mitchell defendants to procure insurance that would cover the risks of loss in the operation of its business. It is alleged that the Mitchell defendants advised the Insured to procure insurance with AAIC.
On November 7, 2023, the Insured suffered “an event in the kitchen” at Emma’s Ale House. After receiving notice, AAIC disclaimed coverage, pursuant to the fact the loss was caused by corrosion damage and is not considered a “breakdown.” In sum, AAIC determined that it was unable to substantiate any malfunction in cooking equipment which caused the loss.
In the coverage action, the Insured alleged claims against the Mitchell defendants, sounding in negligence and breach of contract. The Mitchell defendants moved to dismiss all claims against them.
The Court began the analysis by analyzing the standard in New York to hold a broker liable for negligence, which is “if he or she fails to exercise due care in an insurance brokerage transaction. Thus, a plaintiff may seek to hold a defendant broker liable under a theory of either negligence or breach of contract.” However, an insurance agent also has a common-law duty to obtain requested coverage for a client, within a reasonable amount of time. Therefore, to sustain a burden for a case involving negligence or breach of contract against a broker, a plaintiff “must establish that a specific request was made to the broker for the coverage that was not provided by the policy.”
In addition, even absent a special request, a broker can be liable for negligent misrepresentation, in exceptional circumstances, where a special relationship exists between the customer and the insurance broker. To satisfy this burden, the plaintiff must demonstrate (1) the existence of special or privity-like relationship imposing a duty on the defendant to impart correct information to the plaintiff; (2) that the information was incorrect; and (3) reasonable reliance on the information.
Based on the above, the Court found that all causes of action should be dismissed, because the plaintiff failed to allege it ever made a specific request to the Mitchell defendants for coverage that was not provided, and failed to allege a special relationship between the parties, outside of the ordinary broker-client relationship.
The Insured attempted to seek leave to replead but failed to request the relief through a cross-motion. As such, the Court denied the affirmative relief, because it cannot be granted in opposition. However, in any case, the Court found that the plaintiff failed to demonstrate that it would be able to state any viable causes of action upon repleading and failed to submit any amendments to cure the present deficiencies in the Complaint.
Lastly, the Court found that discovery would not change the result of the motion, because the facts to establish a specific request and/or a special relationship would be within the plaintiff’s possession.
As such, the Court granted the Mitchell defendants’ motion, in full, and dismissed them from the coverage action.
LEXI’S LEGISLATIVE LOWDOWN
Lexi R. Horton
[email protected]
09/25/26 New York Assembly Bill A11725
New York State Assembly
Proposed Legislation to Prohibit the Use of Credit History in Homeowners’ Insurance Underwriting, Rating, Cancellation, and Renewal Decisions
Assembly Bill A11725 was just introduced on September 16, 2026, and referred to the Assembly Insurance Committee. The bill seeks to amend the Insurance Law by adding a new section 2802-a governing the use of credit information in homeowners’ insurance.
If enacted, an insurer could not refuse to underwrite, cancel, or refuse to renew a homeowners’ policy based wholly or partly on an applicant’s or insured’s credit history. The prohibition would also apply when the applicant or insured has no credit history or the insurer is unable to determine that history.
The bill would further prohibit insurers from using credit history to rate a risk, including by providing or removing a discount, imposing or removing a surcharge, assigning an insured or applicant to a pricing tier, or placing the applicant or insured with an affiliated insurer. Insurers would also be prohibited from requiring a particular payment plan based wholly or partly on credit history.
In practical terms, A11725 would remove credit-related considerations from both eligibility and pricing decisions for homeowners’ insurance, requiring carriers to rely on other permissible underwriting and rating factors.
VICTORIA’S VISION ON BAD FAITH
Victoria S. Heist
[email protected]
09/21/26 Henry Molded Props. v. Cincinnati Ins. Co.
United States District Court, Middle District of Pennsylvania
Pennsylvania Court Grants Insurer's Summary Judgment Motion Dismissing Bad Faith Allegations
Henry Molded Products ("HMP") had a commercial property insurance policy with Cincinnati when a fire damaged its property. HMP sued Cincinnati to contest its handling of the fire-related claims, including the replacement cost value of equipment, HMP's loss of business income, and bad faith handling of the claim. Cincinnati moved for partial summary judgment in the case, for HMP's breach of contract and bad faith claims.
For its bad faith claim, HMP alleged that Cincinnati lacked a reasonable basis to deny its claim and Cincinnati generally mishandled its claims, including delaying the process.
To establish bad faith in Pennsylvania, an insured must demonstrate by clear and convincing evidence that the insurer did not have a reasonable basis for denying benefits under the policy and the insurer knew or recklessly disregarded its lack of a reasonable basis in denying the claim. In Pennsylvania, breach of contract and bad faith are different causes of action unless the bad faith claim relies solely on the disclaimer of coverage. An insurer can oppose a bad faith claim by showing evidence of a reasonable basis for its actions or inaction.
In its motion, Cincinnati argued that it had a reasonable basis for its coverage decisions and acted reasonably. Cincinnati argues that HMP's bad faith claims related to its claims specialist's handling of the claim do not amount to bad faith, and at most negligence. Further, Cincinnati argues it did not act in bad faith because it relied on expert opinions in making its coverage determination. Cincinnati also argues that HMP did not cite to evidence from the record to support its bad faith claim, so it cannot meet its burden for the bad faith claim to survive summary judgment.
The Court granted Cincinnati's motion for partial summary judgment on the bad faith claim because: (1) Cincinnati can defeat a bad faith claim at summary judgment by putting forth a reasonable basis for its actions or omissions; (2) HMP provides no explanation as to why its allegations amount to bad faith; and (3) HMP cites to no record evidence to support its bad faith claims.
SHIM’S SERIOUS INJURY SEGMENT
Stephen M. Shimshi
[email protected]
09/23/26 Matter of Nostrand Drugs Rx, Inc v. Church Mutual Ins. Co.
Appellate Division, Second Department
Appellate Division Affirms Denial of Petition to Vacate a Master Arbitrator's Award in Connection With a Motor Vehicle Accident
Ahsan Ali ("Ali") was involved in a motor vehicle accident in September 2020. He received prescription medications from Nostrand Drugs Rx, Inc. ("Nostrand"), petitioner, for injuries he sustained in connection with said accident. Nostrand submitted an insurance claim to Church Mutual Ins. Co. (hereinafter "Church Mutual") for reimbursement of costs incurred in connection with medications dispensed, in the amount of $2,343.20. Nostrand never received payment from Church Mutual. Nostrand subsequently submitted the insurance claim to arbitration. In an award dated December 11, 2022, an arbitrator denied Nostrand’s claim. Thereafter, Nostrand requested that the matter be reviewed by a master arbitrator. The master arbitrator upheld the award in a February 24, 2023, decision. Nostrand commenced a proceeding pursuant to CPLR article 75 to vacate the master arbitrator’s award in in April 2023. Pursuant to an order dated December 4, 2024, the Supreme Court denied Nostrand’s petition to vacate the master arbitrator's award. Nostrand appeals.
"'Consistent with the public policy in favor of arbitration, the grounds specified in CPLR 7511 for vacating or modifying a no-fault arbitration award are few in number and narrowly applied'" (Matter of Allstate Ins. Co. v Westchester Med. Group, M.D., 125 AD3d 649, 650, quoting Matter of Mercury Cas. Co. v Healthmakers Med. Group, P.C., 67 AD3d 1017, 1017). "Arbitrators exceed their power only when they issue an award that 'violates a strong public policy, is irrational or clearly exceeds a specifically enumerated limitation on the arbitrator's power'" (Matter of County of Nassau v Nassau County Investigators Police Benevolent Assn., Inc., 203 AD3d 824, 826, quoting American Intl. Specialty Lines Ins. Co. v Allied Capital Corp., 35 NY3d 64, 70). "The master arbitrator's determination of the law need not be correct: mere errors of law are insufficient to set aside the award of a master arbitrator" (Acuhealth Acupuncture, P.C. v Country-Wide Ins. Co., 170 AD3d 1168, 1168, quoting Matter of Liberty Mut. Ins. Co. v Spine Americare Med., 294 AD2d 574, 577).
In the instant case, Nostrand failed to allege any statutory grounds for vacating the master arbitrator's award (see Matter of American Tr. Ins. Co. v Big Apple Pain Mgt., PLLC, 242 AD3d 1198, 1199; Matter of V.S. Care Acupuncture, P.C. v Country-Wide Ins. Co., 176 AD3d 832, 833-834). Therefore, the Appellate Division, Second Department, determined that the Supreme Court properly denied Nostrand's petition to vacate the master arbitrator's award.
NEW ENGLAND ALMANACK
Barbara A. O’Donnell
[email protected]
Alexander G. Henlin
[email protected]
Iryna N. Dore
[email protected]
09/11/26 Roberge v. Travelers Prop. Cas. Co. of Am
First Circuit Court of Appeals
The First Circuit Court of Appeals Denied Plaintiff’s Desperate Arguments of a Waiver and a Failure to Comply with the Statutes Following Rhode Island Supreme Court’s Finding That Limitation of UM/UIM Coverage to Persons “Occupying” a Covered “Auto” Does Not Violate Rhode Island Law
The plaintiff was in a car accident while acting within the scope of her employment. The plaintiff submitted a claim for UM/UIM coverage to the employer’s carrier.
The policy issued to the plaintiff’s employer limited coverage to “anyone ‘occupying’ a covered ‘auto’ or a temporary substitute for a covered ‘auto.’” Accordingly, the carrier denied coverage after finding that the plaintiff was driving her own car at the time of the accident. In the disclaimer, the carrier specifically advised the plaintiff that coverage was denied because she was not driving a covered auto and, as a result, was not an “insured” for purposes of UM/UIM coverage.
The Rhode Island Supreme Court held that: (i) Rhode Island law does not require the carrier to consider an employee who is operating her own personal vehicle while in the scope of her employment, a named insured under the employer’s auto policy; and (ii) an employer’s auto insurance policy that provides liability coverage to employees in the scope of their employment, but does not provide UM/UIM coverage, does not violate applicable statute and Rhode Island public policy.
Dissatisfied with the Court’s decision, the plaintiff requested that the First Circuit Court of Appeals find in favor of UM/UIM coverage under alternative theories.
First, the plaintiff argued that the carrier waived its defense that she was not entitled to UM/UIM coverage by failing to state that the policy was not “primary” in the denial letters. The Court confirmed that, under Rhode Island law, the insurer must promptly provide a reasonable and accurate explanation for its denial of an insurance claim. When an insurer denies a claim based on “a specific provision, condition, or exclusion,” it must reference “such provisions, conditions, or exclusions” in its denial. In this case, after considering the carrier’s denials, the Court held that the carrier “focused like a laser on the policy language itself and explained. . . why [its] interpretation of the policy excludes [the plaintiff] as a covered person,” i.e. it stated that the plaintiff operated her own vehicle at the time of the accident and cited specific provisions of the policy under which the plaintiff did not qualify as an “insured.”
The Court also observed that Rhode Island law does not require a carrier, when evaluating a claim and communicating a policy coverage position, “to anticipate and address every argument a litigant might conjure up.”
Second, the plaintiff argued that she was entitled to UM/UIM coverage because her employer had never signed a form rejecting UM/UIM coverage for all vehicles. In the absence of coverage provided by the policy to the plaintiff to begin with (regardless of the absence of formal rejection of coverage), the Court found the plaintiff’s argument unpersuasive.
Finally, the plaintiff argued that the carrier violated statutory provisions that required the carrier to notify the named insured of the availability of UM/UIM coverage in an amount equal to the liability coverage at the time of renewal and amendment of the policy. But, the plaintiff failed to provide any evidence supporting the fact that no notice was provided. In the absence of such evidence, the Court denied the plaintiff’s argument.
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.
09/09/26 Panasonic Canada Inc. v. XL Specialty Insurance Company Court of Appeal for Ontario
Ransomware Coverage Cannot Be Chosen À La Carte: Ontario’s Appellate Court Gives a Ransomware Endorsement its Full Effect, and a US $2 Million Cyber Loss Becomes Wholly Self-Insured
The Court of Appeal for Ontario has held that a cyber insured cannot sidestep a ransomware endorsement’s higher retention by presenting its loss under other coverage grants in the base policy. The decision matters to U.S. readers for two reasons. First, it treats an endorsement as an amendment to the entire policy rather than a standalone coverage option the insured may elect to invoke or ignore. Second, the policy and endorsement at issue are copyrighted standard forms used on both sides of the border, and the court said so expressly when selecting its standard of review. A Canadian appellate reading of that wording will be of interest to anyone adjusting or litigating the same form in the United States — particularly now that a Texas federal court has reached the opposite result on a differently drafted ransomware sublimit.
The ransomware incident
Panasonic Canada suffered a serious network intrusion in February 2022. Attackers gained access after an employee opened an infected file. They downloaded confidential and sensitive data, posted it online, and left a message inviting Panasonic to make contact. The message warned that data had been encrypted, told Panasonic not to attempt recovery on its own, and offered to decrypt two files free of charge — an unmistakable implication that payment would be demanded for the rest.
Panasonic’s corporate policy was not to negotiate with attackers. It never contacted them and paid no ransom. Instead it retained incident-response professionals, outside counsel, and forensic and breach-response providers. It repaired its network, paid substantial employee overtime, ran a parallel environment, and purchased 140 replacement laptops to prevent reinfection of the restored network. The parties agreed the claim was worth approximately US$2 million.
XL accepted that portions of the claim fell within the policy’s third-party liability, data-breach response, crisis-management, business-interruption/extra-expense, and data-recovery coverages. The dispute was not whether there was potentially covered loss; it was the retention. The base policy generally imposed a US$1.5 million retention. Endorsement #023, the ransomware sublimit endorsement, set a US$3 million retention for ransomware-event loss.
The competing positions
Panasonic argued for the US$1.5 million retention. It had not sought reimbursement of ransom or negotiation costs under the endorsement’s cyber-extortion reimbursement grant. It claimed instead under separate base-policy coverages for breach response, legal costs, restoration work, and extra expense.
XL responded that the form of the claim submission did not control. The endorsement defined “Ransomware Event Loss” broadly to capture any loss arising from, connected with, or in any way involving a cyber-extortion threat, including damages, claim expenses, regulatory damages, first-party costs, and other amounts payable under the policy. Because Panasonic’s loss resulted from the ransomware attack and extortion threat, XL said the US$3 million retention applied to all of it.
The application judge: policyholder choice prevailed
Leiper J. accepted Panasonic’s position (2025 ONSC 4407). She reasoned that the endorsement’s definitions applied “solely for the purposes of” the endorsement, and that nothing in the policy or the endorsement obliged Panasonic to seek indemnity under Endorsement #023. Absent a clear limitation, she held, a policyholder may choose the claim path more advantageous to itself — here, the base-policy grants and their US$1.5 million retention.
She also found the laptop purchases were reasonable and necessary mitigation and restoration costs, save for six units not proved necessary, and rejected XL’s property-damage exclusion argument. Those findings were not the focus of the appeal.
The Court of Appeal: read the endorsement with the policy
Gillese J.A., writing for the court, applied a correctness standard rather than reviewing for palpable and overriding error. The reasoning follows Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37: the base policy and Endorsement #023 are copyrighted standard forms used across the United States and Canada, the interpretation carries precedential value, no prior decision had construed this wording, and the factual matrix was of limited assistance. That framing is itself worth noting — the court was deliberately settling the meaning of a widely used North American cyber form.
On the merits, the court began with a proposition that reaches well beyond cyber insurance: an endorsement is part of the policy and must be interpreted with it. It relied on the Supreme Court of Canada’s decision earlier this year in Emond v. Trillium Mutual Insurance Co., 2026 SCC 3, where the court held at para. 36 that endorsements are not standalone contracts but are “built on the foundation of the policy,” even where an endorsement is comprehensive as to the coverage it provides.
That mattered because Endorsement #023 did considerably more than add a discrete grant for ransom payments. It stated on its face that it “changes the policy.” It added an endorsement schedule fixing a US$3 million retention, a US$5 million sublimit, and a 12-hour waiting period for ransomware events. It replaced the base policy’s provisions and definitions concerning ransomware and cyber-extortion. And it provided that the endorsement controlled to the extent of any inconsistency with the rest of the policy.
Read together, those provisions meant the endorsement governed all claims involving a ransomware event. Its definition of ransomware-event loss was deliberately expansive, and Panasonic’s costs were connected with an extortion threat involving disruption of its network, encryption of data, misuse of data, and the threat to prevent access. That Panasonic paid no ransom and sought no reimbursement of ransom payment or negotiation costs did not alter the nature of the event or of the loss. “Because the claim falls within the meaning of ‘Ransomware Event Loss’ in Endorsement #023, it is governed by Endorsement #023,” Gillese J.A. wrote. “Therefore, it matters not that Panasonic made its claim pursuant to the base policy.”
The words “solely for the purposes of this Endorsement” did not confine the endorsement to claims formally advanced under its cyber-extortion reimbursement clause. The application judge’s narrow reading “cannot be correct,” the court held, because other clauses in the same endorsement expressly replaced the base policy’s ransomware and cyber-extortion wording. The phrase identified the scope within which the new definitions operated; it did not make the endorsement optional.
The result was decisive. Panasonic’s roughly US$2 million claim fell below the US$3 million retention, so the loss was wholly self-insured. The court allowed the appeal, set aside the declaration, dismissed the application, and awarded XL costs of $21,000 for the appeal and $88,000 for the application.
A contrasting American decision
U.S. practitioners should read Panasonic alongside CiCi Enterprises, LP v. HSB Specialty Insurance Co. (N.D. Tex., Feb. 23, 2026), where Lindsay J. declined to let a “Ransomware Event Sub-Limit Endorsement” cap a US$3 million cyber policy at US$250,000 for a negotiated US$400,000 ransom and related loss exceeding US$1.2 million. Both courts asked the same question — does the ransomware endorsement reach beyond its own coverage grant? — and the answer turned on drafting. The HSB endorsement limited liability “solely with respect to the coverage afforded under this endorsement” but never identified the coverage it afforded, was inserted into the limits section rather than the insuring agreements, never used the words “Cyber Extortion” or “Extortion Loss,” and closed by confirming that all other policy terms remained unchanged. Two other endorsements in the same policy named the insuring agreements they modified; the ransomware endorsement did not. XL’s Endorsement #023, by contrast, said it changed the policy, replaced specific base-policy definitions, and supplied a conflict clause giving itself priority. Same commercial objective, opposite outcome — and the difference is in the language.
Why the decision matters
First, the operative cause and the defined event matter more than the label affixed to the claim. Cyber losses commonly implicate several coverage grants at once — incident response, privacy liability, business interruption, data recovery, extortion, and crisis management. Panasonic holds that an insured cannot select the coverage silo with the most favourable retention while treating an event-specific endorsement as irrelevant, and it displaces the application judge’s broader proposition that a policyholder may simply choose the more advantageous claim path.
Second, retentions and sublimits require the same whole-policy analysis as exclusions. Although described commercially as a retention or deductible, the US$3 million figure limited XL’s payment obligation entirely. The court examined the endorsement’s schedule, revised definitions, scope provisions, and conflict clause — not merely the insuring agreement under which the costs were submitted.
Third, endorsement hierarchy clauses deserve early attention. A clause providing that an endorsement controls in the event of inconsistency is not boilerplate to be considered last. Here it confirmed the parties’ allocation of ransomware risk and answered the insured’s argument that separate base-policy grants could avoid the higher retention. The CiCi decision is the mirror image: no such clause, no identified insuring agreements, no cap.
Fourth, because the correctness standard was grounded in the form’s cross-border circulation, the decision has a reach beyond Ontario. Insurers and coverage counsel should map each expense to the relevant event definition and endorsement before communicating a retention position. Brokers and insureds should determine, at placement and renewal, whether a ransomware endorsement applies only to ransom payments or, as here, to the much broader universe of loss connected with an extortion threat — and should price the difference between a US$1.5 million and a US$3 million retention accordingly.
Finally, a point for incident response. Declining to negotiate with attackers may be sound risk management, and it plainly was not held against Panasonic on the merits of the expenses claimed. But it will not by itself remove a claim from a broadly drafted ransomware event provision. An insured that pays nothing to the threat actor can still bear the whole loss.
Cyber policies are assembled from a base form and a series of highly consequential endorsements. Panasonic is a timely reminder — on both sides of the border — that the coverage analysis must begin with the policy as a whole, and that the ransomware endorsement may determine the economics of the claim even when no ransom is ever paid.
This column is provided for information only and is not legal advice.
