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Motor carrier insurer must defend truck driver


A federal appeals court has reversed a lower court in a dispute between insurers over coverage for a trucking accident, and held that a motor carrier liability policy must provide coverage.

A truck driver was involved in a three-vehicle collision while hauling goods for Melville, New York-based International Trucking Group Inc., in a truck that had been leased from Baldwin, New York-based T.F. Victors Trucking Company Inc., according to Monday’s ruling by the 2nd U.S. Circuit Court of Appeals in New York in United Financial Casualty Co. v. Country-Wide Insurance Co.

The issue in the case was which of two insurers was responsible for the driver’s indemnification and defense. New York-based Country-Wide Insurance Co. had issued a motor carrier liability policy to ITG, while Mayfield Village, Ohio-based United Financial had issued a “non-trucking liability” policy to Victors, according to the ruling.

The United policy included an exclusion, applicable only when other insurance was available, for when a truck is used for business purposes.

United assumed the truck driver’s defense in July 2016, but immediately contacted Country-Wide about tendering the defense to it, based on its discovery that Country-Wide had a policy covering ITG, according to the ruling.

After several attempts, Country-Wide responded to United Financial’s communications in January 2017, in which it disclaimed coverage.

In March 2017, United Financial filed suit in U.S. District Court in Brooklyn seeking a declaration that Country-Wide, and not it, had a duty to defend and indemnify the truck driver.

Country-Wide argued United Financial could not deny coverage because it had not promptly served a disclaimer notice under New York insurance law, which United Financial disputed.

Both parties moved for summary judgment. The District Court held that the 52-day delay between United Financial receiving the January 2017 response from Country-Wide and its March filing with the court was unreasonable and precluded it from disclaiming coverage.

The ruling was overturned by a unanimous three-judge appeals court panel. It did not become readily apparent Country-Wide did cover the truck driver, and that United Financial was entitled to disclaim coverage, until July 2017, said the ruling. “Only at that point” was United Financial able to obtain a copy of the Country-Wide policy and verify it covered the truck driver, said the ruling. 

“As a result, when (United Financial) learned in July 2017 that it was entitled to disclaim, (United Financial) had already disclaimed by filing its action for declaratory judgment” in March 2017, said the ruling, in concluding its disclaimer was timely under New York law. The case was vacated and remanded.

United Financial attorney Larry Rabinovich, a partner with Barclay Damon LLP in New York, said in its ruling, the court did not detract in any way from insurers’ obligation “to let their insureds know as soon as possible” it is going to deny coverage.

This particular case involves a contingent policy that “applies only if the expected policy is not in effect for some reason or another.” The court’s ruling was “common sense,” in holding the time to serve declination did not begin to run “until you know whether the other policy is going to have coverage,” Mr. Rabinovich said.

Country-Wide’s attorney could not immediately be reached for comment.




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