INSURANCE LAW 3240 ALLOWS A DIRECT CAUSE OF ACTION AGAINST INSURERS IF THE INSUREDS AND RISKS ARE IN NEW YORK, NOT ONLY WHEN THE POLICY IS ISSUED OR DELIVERED IN NEW YORK (CT APP).
The Court of Appeals, in a full-fledged opinion by Judge Wilson, over a three judge dissenting opinion, reversing the appellate division, determined several motions to dismiss in this insurance-coverage dispute should not have been granted. Plaintiff’s decedent was killed when a DHL delivery truck driven by an employee of another company crossed the center line, causing a head-on crash. At issue was the reach of Insurance Law 3240 with respect to an insurance policy issued to DHL by AAIC. The appellate division held that Insurance Law 3240 did not allow suit because the policy was not “issued or delivered in this state.” The Court of Appeals held the suit is allowed under Insurance Law 3240 because the insureds and risks are located in New York (two other issues, whether the DHL truck was a “hired auto” and whether it was driven with “permission” are not summarized here):
AAIC adopts the Appellate Division’s rationale that because AAIC’s policy was issued in New Jersey and delivered in Washington and then in Florida, it was neither issued nor delivered in New York, and therefore plaintiff cannot recover from AAIC pursuant to Insurance Law § 3420. …
Insurance Law § 3420 allows a limited cause of action on behalf of injured parties directly against insurers. Section 3420 applies to policies and contracts “issued or delivered in this state” … . Insurance Law § 3420 does not define the term “issued or delivered in this state,” but other provisions of the Insurance Law are instructive: “[T]he proper interpretation of the term ‘issued or delivered in this state’ refers both to a policy issued for delivery in New York, and a policy issued for delivery outside of New York” … . In Preserver, we interpreted section 3420 (d), which then required insurers to provide written notice when disclaiming coverage under policies “issued for delivery” in New York. We held that “[a] policy is ‘issued for delivery’ in New York if it covers both insureds and risks located in this state” (10 NY3d at 642). Thus, under Preserver, “issued for delivery” was interpreted to mean where the risk to be insured was located — not where the policy document itself was actually handed over or mailed to the insured. We interpreted section 3420 to provide a benefit — deliberately in derogation of the common law — to New Yorkers whenever a policy covers “insureds and risks located in this state” … . Applying the Preserver standard to the facts of this case, it is clear that DHL is “located in” New York because it has a substantial business presence and creates risks in New York. It is even clearer that DHL purchased liability insurance covering vehicle-related risks arising from vehicles delivering its packages in New York, because its insurance agreements say so. Carlson v American Intl. Group, Inc., 2017 NY Slip Op 08163, CtApp 11-20-17
INSURANCE LAW (INSURANCE LAW 3240 ALLOWS A DIRECT CAUSE OF ACTION IF THE INSUREDS AND RISKS ARE IN NEW YORK, NOT ONLY WHEN THE POLICY IS ISSUED OR DELIVERED IN NEW YORK (CT APP))/INSURANCE LAW 3240 (INSURANCE LAW 3240 ALLOWS A DIRECT CAUSE OF ACTION IF THE INSUREDS AND RISKS ARE IN NEW YORK, NOT ONLY WHEN THE POLICY IS ISSUED OR DELIVERED IN NEW YORK (CT APP))