The Department divided this circular letter into seven sections: I. Purpose II. Discussion III. Fair Claims Practices IV. Unfair Claims Practices V. Records VI. Loss and Expense Reserves VII. ConclusionMy thoughts and observation on each section: I. ...

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Roy Mura

Coverage Counsel - 5 new articles

Insurance Circular Letter No. 11 (2019) -- RE: New York State Child Victims Act and Related Insurance

Yesterday the New York State Department of Financial Services issued Circular Letter No. 11 (2019) RE: New York State Child Victims Act and Related Insurance. If you're wondering why New York's insurance regulator thought it necessary to tell insurance licensees in the state of New York what the DFS "expects" (x4) and "encourages" (x13) its licensees to do with CVA-related insurance claims, read on.

Insurance Circular Letter No. 11 (2019)
September 12, 2019
TO:All Authorized Property/Casualty Insurers, Licensed Insurance Producers, Adjusters, and Reinsurers
RE:New York State Child Victims Act and Related Insurance
STATUTORY AND REGULATORY REFERENCES: N.Y. Financial Servs. Law; N.Y. Ins. Law §§ 1303, 2110 and 2601; 11 NYCRR Parts 216 (Insurance Regulation 64) and 243 (Insurance Regulation 152); Chapter 11 of the Laws of 2019.
I. Purpose
The purpose of this circular letter is to inform all authorized property/casualty insurers, licensed insurance producers, adjusters, and reinsurers (collectively, “Addressees”) that the Department of Financial Services (“Department”) expects Addressees to cooperate fully with the intent of the Child Victims Act (“CVA”).

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Property Owner in Name Only Found Not Entitled to Coverage for Fire Loss of Rental Income Property

Porter v. State Farm Fire & Cas. Co.
(WDNY, decided 6/6/2019)

If your name is on the deed and insurance policy but you invested no money in the acquisition, operation and insuring of rental income property and want nothing to do with its post-loss claim, are you entitled to policy proceeds in the event the property burns down?

Under the facts of this case, the court said no, you (and the real owner) get nothing.

Plaintiff went to a property foreclosure auction in Buffalo, New York, and, as an accommodation to her sister's boyfriend, successfully bid on 254 Strauss Street. Plaintiff paid the required $500 deposit, but her sister and sister's boyfriend reimbursed her that amount in full and paid the remaining balance of the auction price. Although the Strauss Street property was placed in plaintiff's name, she did not manage or have any interest in the subject property. Rather, her sister's boyfriend maintained, and leased the subject property, made renovations, paid property taxes on the property and "handled everything" pertaining to evictions.

Plaintiff testified that she had no authority...

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Denial of No-Fault Benefits Based on Biomechanical Injury Causation Analysis Report Upheld in AAA Arbitration & Master Arbitration

Matter of Arbitration between Scott A. Croce, DC, PC/Erie County Chiropractic aao [Assignor] and Preferred Mut. Ins. Co.
(Arbitrator Fred Lutzen, dated 3/28/2019)
(Master Arbitrator Marilyn Felenstein, dated 7/15/2019)

Mura & Storm associate Ryan Mura was privileged to represent Preferred Mutual Insurance Company (PMIC) in this American Arbitration Association mandatory no-fault arbitration matter.

PMIC denied payment of the applicant's EMG/NCV testing billing based on the "Biomechanical Injury Causation Analysis" peer review report of expert biomechanist Dr. Jacqueline M. Lewis, Ph.D., which had concluded:
1. On May 18, 2017, [IP/Assignor] was the driver of a 2011 Buick LaCrosse that was traveling in the Walgreens parking lot (3288 Main Street), in Buffalo, New York, when contact occurred between the rear of a 2001 Ford Focus and the front of her vehicle.
2. The subject incident is consistent with a Delta-V of less than 6.4 miles per hour, and more comparable to 2.5 miles per hour with an average acceleration of less...

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Summary Judgment Granted to Insurer Based on Policy's Special Employee Theft Exclusion

Albany Airport HIE, LLC v. The Hanover Ins. Grp., Inc.
(NDNY, decided 8/7/2019)

Plaintiffs owned two hotels in the Albany, New York area. In 2010, plaintiffs entered into a management agreement with Bullock Hospitality LLC ("Bullock Hospitality") to manage both hotels. Tod Hanlon signed the management agreement as the sole member and manager of Bullock Hospitality.

In August 2014 Citizens Insurance Company of America issued a commercial package policy listing eight named insureds, including the two plaintiffs and Bullock Hospitality. The policy's GOLD FORM BROADENING ENDORSEMENT's Employee Theft section contained this exclusion:
(8) Special Employee Theft Exclusions
We will not pay for:
(a) Loss resulting from "theft" or any other dishonest act committed by:
(i) You; or
(ii) Any of your partners or "members";
Whether acting alone or in collusion with other persons.
The policy defined "you" and "your" to mean "the Named Insured shown in the Declarations"and "member" to mean "an owner of a limited liability company represented by its membership interest who, if a natural...

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Denial of No-Fault Benefits to Assignee of Rate Evader Upheld in Arbitration

Matter of Bronx Chiropractic Health Services, PC aao SB and State Farm Fire & Cas. Co.
(AAA Case No. 17-18-1114-9479, issued 8/23/2019)

This morning my office received this AAA award/decision, upholding our client's denial of no-fault benefits based on the assignor's proven rate evasion:
The EUO on the EIP/insured took place on October 29, 2018. The information that was provided based upon the testimony of the insured is that there was no real connection to the state of Maine, the policy under which the car was insured. The EIP's driver's license was NY and she was employed at Columbia Hospital. There was no real nexus between the EIP and Maine. The Respondent therefore provided the affidavit of Christina XXXX and [sic] underwriter for the Respondent. Had the Respondent been aware of the false information the policy would never had been issued.
Applicant has not submitted any evidence to rebut the contentions made by the Respondent.
Based upon the facts herein and the evidence provided, I find that Respondent has demonstrated by a preponderance of the evidence as a matter of law that EIP made material...

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