A recent case out of New York state underscores the importance of knowing your insurance program and fulfilling the conditions precedent to coverage. Having a document that: 1) identifies the policies under which your company is insured (including as an additional insured), and 2) identifies all of the conditions precedent to coverage, including but not limited to the notice requirements, can mean the difference between having coverage, and forfeiting it.
In Lafarge Building Materials, Inc. v. Harleysville, Ins. Co. of N.Y., Lafarge’s failure to provide timely notice of a claim against it, pursuant to the terms of a liability policy under which it was named as an additional insured, resulted in Harleysville’s refusal to defend or indemnify Lafarge. The New York trial and appellate courts found the carrier justified in its response, leaving Lafarge with the responsibility to foot the bill for its own defense and the $1.4 million settlement to the plaintiff.
The full text of the case, which is summarized below, can be found at: Lafarge Building Materials, Inc. v. Harleysville, Ins. Co. of N.Y., Case No. 526033, 2018 WL 5659750 (Nov. 1, 2018, 2018 Slip Op. 07385, — N.Y.S. 3d — (2018)).
A millwright employed by Adirondack Mechanical Services (“AMS”) was working at LaFarge’s cement manufacturing plant when he was injured. The millwright filed a personal injury lawsuit and served Lafarge in April 2008. Approximately nine months later, Lafarge tendered the personal injury lawsuit to Harleysville for defense and indemnity. Harleysville disclaimed coverage on the basis that Lafarge had not provided notice “as soon as practicable” as required by the policy.
The personal injury lawsuit ultimately settled, with Lafarge agreeing to pay $1.4 of the settlement. Lafarge then sued Harleysville to recover the money damages it incurred because of Harleysville’s refusal to defend and indemnify Lafarge. Harleysville succeeded in having Lafarge’s claims against it dismissed at the summary judgment stage because of Lafarge’s late notice.
Lafarge justified its nearly nine-month delay in providing notice by claiming it lacked knowledge that it was covered under the policy at issue. The court found that there was uncontroverted evidence that soon after Lafarge was served with the underlying lawsuit, it possessed the following information: 1) an occurrence had taken place at its facility; 2) the incident involved an employee of one of its contractors, AMS; 3) language in Lafarge’s standard terms and conditions required contractors like AMS to name Lafarge as an additional insured on AMS’s liability policies; and 4) Lafarge had located a certificate of liability insurance identifying it as the holder of the certificate, and Harleysville as the insurer for the project.
Lafarge claimed that it had been unable to locate the specific purchase order that corresponded with the work being performed by the millwright for nearly nine months and thus could not confirm that it was covered under the subject policy. This argument did not persuade the court, who opined that the information it possessed soon after service of the complaint was sufficient to inform Lafarge that there was a reasonable possibility of the subject policy’s involvement. Lafarge’s failure to notify Harleysville until nearly nine months later was unreasonable as a matter of law.
This result highlights the importance of having a comprehensive understanding of the policies under which your company is insured, whether as the named insured or an additional insured, and knowing and complying with the conditions precedent to coverage.
If you have any questions about this alert or about insurance policies and the conditions precedent to coverage, please contact Leech Tishman’s Litigation or Insurance Coverage & Corporate Risk Mitigation Practice Groups at 412.261.1600.
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