THE ENDORSEMENT RELIED UPON BY THE DEFENDANT INSURER TO EXCLUDE COVERAGE FOR AN OIL SPILL DID NOT MEET THE STRICT CRITERIA FOR AN EXCLUSION (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendant insurer was not entitled to summary judgment on the ground the oil spill damage was covered by a policy exclusion. The policy endorsement relied on by defendant did not meet the strict criteria for an exclusion from coverage:

In order “to ‘negate coverage by virtue of an exclusion, an insurer must establish that the exclusion is stated in clear and unmistakable language, is subject to no other reasonable interpretation, and applies in the particular case'” … . “[P]olicy exclusions are given a strict and narrow construction, with any ambiguity resolved against the insurer” … . Here, in support of its motion for summary judgment, the defendant did not point to an applicable policy exclusion. Rather, the defendant relied on the ELF [Property Remediation for Escaped Liquid Fuel and Limited Lead and Escaped Liquid Fuel Liability Coverages] endorsement, which provided additional coverage for the remediation of escaped liquid fuel in limited circumstances not present here. Such argument is unavailing. On its face, the ELF endorsement is not an exclusion. While the defendant argues that the existence of the ELF endorsement compels the conclusion that the policy itself excludes coverage for escaped liquid fuel under any circumstances not specified in the endorsement, policy exclusions are “not to be extended by interpretation or implication” … . As such, the defendant failed to meet its initial burden of establishing, prima facie, that an exclusion not subject to any other reasonable interpretation applied in this case … . Mulle v Lexington Ins. Co., 2021 NY Slip Op 05707, Second Dept 10-20-21