Articles Posted in Insurance Law

One should always be aware of contractually shortened statute of limitation provisions in insurance contracts, as was highlighted in the recent case of Chandler Management Corp. v. First Specialty Insurance (Sup. Ct. N.Y. Co. Docket No. 509677/15).

In this case, Chandler purchased insurance coverage for an apartment complex it owned in Dallas, Texas.  The policy specifically stated that the parties submitted to the exclusive jurisdiction of the New York courts, and that the laws of the State of New York would govern.  More importantly, the policy stated that any lawsuits regarding coverage must be commenced within twelve months of the date of the physical loss or damage.

According to Chandler, its apartment sustained roof damage on or about May 24, 2011.  On June 25, 2012 it commenced a lawsuit in the District Court of Dallas, Texas, apparently unaware of the above noted provisions.  The case was dismissed by the trial level court because of the New York forum selection clause and this holding was affirmed on appeal.

Insurance issues, especially regarding construction and flood related claims, continue to draw heightened interest by the appellate courts.  In St. George Tower v. Ins. Co. of Greater N.Y. (1st Dep’t, April 21, 2016), the First Department was presented with whether a claim was covered by a “blanket endorsement or law coverage endorsement.”

Plaintiff cooperative corporation purchased a commercial general liability policy from Defendant insurer covering the relevant time period.  After a pump ruptured and damaged the ceiling and floors in a certain apartment, Plaintiff submitted a claim to Defendant, and Defendant provided coverage for the damages sustained to certain apartments.  The flooding also caused mold to develop in certain other units.  As a result, Plaintiff’s architect filed an application pursuant to Directive 14 of the New York City Department of Buildings.

During the architect’s inspection it was discovered that certain concrete slabs were in a deteriorated condition and required repairs pursuant to the New York City Administrative Code.  The condition of the slabs was not caused by the flooding.  Rather, it was apparently caused by poor construction practices during the initial installation.

The New York Court of Appeals has recently addressed the often vexing issue of whether there is insurance coverage for water damage to a residential property. In Platek v Town of Hamburg, 2015 NY Slip Op 01483 (Feb. 19, 2015), the plaintiffs’ home was damaged after a subsurface water main pipe abutting their property ruptured, causing water to flood into their finished basement. Plaintiffs immediately made a claim under their homeowners’ insurance policy issued by Defendant, Allstate Indemnity Company (“Allstate”). The policy excluded damage caused by water, listed as items 1 through 4 in the policy, but contained an exclusion which stated,

We do cover sudden and accidental direct physical loss caused by fire, explosion or theft resulting through items 1 through 4… (emphasis added in the original opinion).

Allstate denied coverage to Plaintiffs’ property damage claim based on item 4 of the policy’s water loss exclusion.

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