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New York crane collapse insurance dispute can proceed: Court

New York crane collapse insurance dispute can proceed: Court

ALBANY, N.Y.—The New York State Court of Appeals has ruled that an insurance company can go forward with its claims that it's not obligated to cover the operator of a tower crane that collapsed in 2008 during construction of a high-rise condominium building in New York.

The tower crane collapse killed seven, injured dozens, damaged several buildings and destroyed one building, according to court documents.

The crane operator, Joy Contractors Inc., had a comprehensive general liability policy with Lincoln General Insurance Co., with limits of $1 million per occurrence and a $2 million aggregate, and a follow form excess policy with Admiral Insurance Co. with a $9 million per-loss and aggregate limit.

Admiral notified Joy and those claiming to be additional insureds—including New York Crane & Equipment Co. Inc., which leased the crane to Joy; Reliance Construction Ltd., the general contractor on the project; and the building's owner/developers—that it was denying coverage due to a residential construction exclusion in the excess policy. In addition, the insurer warned that there might be no coverage due to “inaccuracies…identified in (Joy's) underwriting submission.”

The insurer subsequently sued in New York Supreme Court, seeking a declaration of no coverage. While dismissing various motions and counter motions, the Supreme Court denied Admiral's motion for summary judgment but also denied the defendants' motions to dismiss the insurer's suit.

The state's Appellate Division largely upheld the lower court's findings, though ruling that the residential construction exclusion was inapplicable.

On Tuesday, New York's high court disagreed with the appeals court on the residential exclusion question and held that “there are material issues of fact in this case as to whether the high-rise building under construction was residential or 'mixed-use.'”

The court also upheld Admiral's claims that Joy misrepresented itself in its underwriting submission, claiming it specialized in interior drywall installation, did not do exterior work, and did not do work at a level more than two stories above grade other than interior drywall work. Joy was actually the structural concrete contractor, the court noted, “working on the building's entire exterior with the tower crane.”

The high court sent the case, Admiral Insurance Co. vs. Joy Contactors Inc. et al, back to the trial court in Manhattan for further proceedings.