The declarations pages on insurance policies for contractors and construction companies generally include information about the type of projects being insured and the scope of the insured’s work. This information is important in the classification/rating process but coverage under the policy is also often tied to those operations listed.

In Black Bull Contr., LLC v. Indian Harbor Ins. Co., a New York appellate court was faced with determining whether a disclaimer predicated on the descriptions of work in the declarations were based on an “exclusion” to coverage subject to NY Ins. Law §3420(d)(2)’s timely disclaimer requirement for bodily injury claims. A disclaimer pursuant to § 3420(d)(2) is unnecessary when a claim falls outside the scope of the policy’s coverage portion, as opposed to a disclaimer pursuant to a policy exclusion.

Indian Harbor issued a commercial general liability policy to Black Bull. An endorsement to the CGL coverage form provided: “This insurance applies only to operations that are classified or shown on the Declarations or specifically added by endorsement to this Policy.” The declarations page set forth four classifications: (1) “Carpentry — interior”; (2) “Dry Wall or Wallboard Installation”; (3) “Contractors — subcontracted work — in connection with construction, reconstruction, repair or erection of buildings — Not Otherwise Classified”; and (4) “Contractors — subcontracted work — in connection with construction, reconstruction, repair or erection of buildings — Not Otherwise Classified — uninsured/underinsured”.

Black Bull was hired to perform work on a building in Long Island City owned by non-party United. Luis Mora, a Black Bull employee, was injured when he was struck by a piece of concrete from the chimney while using a jackhammer to demolish it. Mora sued United, who then commenced a third-party action against Black Bull. Black Bull (and United, as an additional insured) sought coverage from Indian Harbor. After a delay of more than two months from receipt of the notice of claim, Indian Harbor disclaimed coverage on the ground that demolition work by Black Bull at the time of Mora’s injury was not within any of the four classifications of work covered by the policy.

Black Bull then commenced a declaratory judgment action against Indian Harbor seeking coverage for itself and for United for the Mora lawsuit. Black Bull claimed that the untimely disclaimer obligated Indian Harbor to provide a defense. The Appellate Division, First Department, held that the classification limitations of coverage merely defined the activities that were included within the scope of coverage “in the first instance” and did not constitute exclusions from coverage that would otherwise exist. As the demolition work in which Mora was engaged did not fall within any of the classifications in the policy declarations, neither Black Bull nor United was covered for under Black Bull’s policy. Thus, notwithstanding the untimely disclaimer, Indian Harbor did not owe coverage.

Thanks to Jorgelina Foglietta for her contribution to this post and please write to Mike Bono for more information.