The Supreme Court of New York, New York County recently had occasion to interpret the terms of an insurance policy and in doing so, ordered that an insurance company was not responsible for defending and indemnifying an insured under the terms of the subject policy.
In MIC Gen. Ins. Corp. v. Rashid, 2023 NYLJ LEXIS 654 (Mar. 6, 2023), Plaintiff, MIC General Insurance Corp. (hereafter “Plaintiff”) sought a declaratory judgment decreeing that it was not responsible to defend and indemnify Defendants, Rezia Rashid and Nawroz Zulfikar (hereafter “Defendants”) as a result of a slip and fall incident involving a third party on Defendants’ property. That third party, Ethel Cardoba, slipped and fell on a sidewalk outside of an insured multi-family residence that Defendants believed to be an “insured location” under the terms of their policy with Plaintiff.
The policy issued by Plaintiff provided coverage for “occurrences” to which “coverage applies,” which included bodily injuries suffered at an “insured location.” The policy’s liability coverage section failed to elaborate as to which occurrences were covered and whether coverage would apply to “residential premises” as one of many types of “insured locations” enumerated in the policy definitions.
Plaintiff filed an unopposed Motion for Default Judgment, which asked the Court to determine that Plaintiff had no responsibility to provide defense and indemnification to Defendants in the underlying personal injury matter brought by Cardoba. In support of the Motion, Plaintiff advanced two arguments. First, Plaintiff argued that the underlying personal injury action is outside the scope of the policy’s coverage. However, the Court disagreed with this argument because the policy expressly stated that Plaintiff would cover the costs of a defense and judgment should suit be brought against an insured for damages because of bodily injury “caused by an ‘occurrence’ to which this coverage applies …” The court specifically found that the policy’s liability coverage section did not limit coverage to “insured locations” or “residential premises” and that while it was reasonable to infer that the sidewalk at issue would not be an “insured location” or a “residential premises,” the absence of an express limitation to coverage under these terms ruled the interpretation of the policy. The Court believed that to make such an inference would be to improperly add meaning to the policy’s explicit language.
Despite the Court rejecting this first argument, it ultimately sided with Plaintiff and held that Plaintiff was not obligated to defend and indemnify Defendants. In so ruling, the Court analyzed the language of the policy as applied to the facts available. In its analysis, the Court found that an “insured location” included one of many types of premises, one of which covered “residential premises.” The policy at issue was purchased by Defendants to cover a three-family dwelling consisting of three separate apartments. However, the policy defined a covered “residential premises” as a “one-family or two-family dwelling.” Given that the subject premises was not a one-family or two-family dwelling, the Court found that it did not qualify as a “residential premises” under the policy’s definition and therefore did not qualify as an “insured location.”
Thus, the denial of defense and indemnification was proper given this express exclusion of Defendants’ premises. In so ruling, the Court refused to give additional meaning to the express terms of an insurance policy and instead, accepted Plaintiff’s argument relying on the explicit exclusion of coverage for the property at issue. The Court also reaffirmed the long-standing principle in New York that the duty to defend and indemnify does not attach simply where a policy is held by an insured and where the insured seeks coverage for incidents beyond the scope of the policy.
