A New York state appellate court recently ruled that an insurer waives its right to deny coverage based on any coverage ground not specifically asserted in its denial of coverage letter. Adames v. Nationwide Mut. Fire Ins. Co., 2008 NY Slip Op 7597 (2d Dep’t App. Div. Oct. 7, 2008).
The plaintiff, who was allegedly injured outside a commercial building, sued the building’s owner for damages. The building’s owner was insured under a homeowner’s insurance policy and a personal umbrella insurance policy, both issued by the same insurer. Plaintiff obtained a default judgment in the personal injury action and served the judgment upon the building owner and its insurer. When the judgment remained unsatisfied, plaintiff commenced an action against the insurer pursuant to Insurance Law §3420(a)(2), which allows a claimant to maintain an action directly against the insurer later seeking summary judgment. In opposing the plaintiff’s summary judgment motion, the insurer relied on two exclusions appearing in the homeowner’s policy, grounds which the insurer had not asserted in its earlier disclaimer letter. Plaintiff’s motion for summary judgment was denied by the lower court.
Plaintiff appealed the denial of her summary judgment motion. The state appellate court ruled in favor of plaintiff, reversing the lower court’s earlier decision and granting the plaintiff’s motion for summary judgment. In reaching its determination, the state appellate court held that the insurer waived its right to deny coverage on the two exclusions raised in its opposition papers because it had failed to deny coverage on those specific grounds in its disclaimer letter.