Loss that Occurs Outside of Policy Period Trips Up Insured (NY)

In Jericho Atrium Associates v. Travelers Property Cas. Co. of America, the Appellate Division, Second Department, recently dealt with the interesting issue as to whether a loss that takes place outside of the policy period is covered despite the fact that the loss was caused by the insured’s conduct during the policy period.  The insured owned a commercial building that was insured under a liability policy issued by Travelers Property Casualty Company.  The insured sold the building, and requested that Travelers remove the premises from coverage under the policy.  Travelers complied, but only 10 days later someone slipped and fell on the premises suffering alleged injury.  That individual then sued the insured and the new owner.  Travelers disclaimed coverage, and the insured commenced a third-party action against Travelers seeking a declaration that Travelers owed coverage for the lawsuit.

The insured argued that there was coverage because the injured claimant alleged that the accident was caused by a dangerous condition that existed on the premises when the insured still owned the property, when it was still insured by Travelers.  The trial court found in favor of the insured, declaring that the insured was entitled to coverage under Traveler’s policy.

But the Second Department reversed the trial court, and ruled that Travelers did not have a duty to defend or indemnify the insured.    The Court rejected the insured’s argument, holding that “[s]ince the policy predicates coverage upon the sustaining of bodily injury during the policy period, it is immaterial that the negligent acts which allegedly caused the occurrence took place while the policy covering the premises was still in effect.”  Accordingly, the Court ruled that the occurrence did not take place during the policy period.

Thanks to Steve Kaye for his contribution to this post.  If you would like more information, please write to Mike Bono.