How to Lose an Insurance Coverage Case

Insured Has Burden to Establish Coverage

Making a claim is not sufficient. It is the obligation of the insured first to establish that there is coverage for the loss that is the subject of the claim. It is never automatic that the insured, by simply presenting a claim, shifts the burden to the insurer.

In Copacabana Realty, LLC v. Fireman’s Fund Ins. Co., — N.Y.S.3d —-, 2015 WL 4257001 (N.Y.A.D. 2 Dept., 7/15/2015), the appellate court, in an action for a judgment declaring that the defendant American Automobile Insurance Company is obligated to provide insurance coverage to the plaintiff for a loss to its property, the plaintiff appeals from an order of the Supreme Court (trial court), which granted the motion of the defendant American Automobile Insurance Company for summary judgment declaring that it is not so obligated.

“In determining a dispute over insurance coverage, the appellate court must first look to the language of the policy” (Consolidated Edison Co. of N.Y. v. Allstate Ins. Co., 98 N.Y.2d 208, 221). Although the insurer has the burden of proving the applicability of an exclusion (see Seaboard Sur. Co. v. Gillette Co., 64 N.Y.2d 304, 311), it is the insured’s burden to establish the existence of coverage (see Lavine v. Indemnity Ins. Co., 260 N.Y. 399, 410).

Where the existence of coverage depends entirely on the applicability of [an] exception to the exclusion, the insured has the duty of demonstrating that it has been satisfied” (Borg–Warner Corp. v. Insurance Co. of N. Am., 174 A.D.2d 24, 31).

The defendant American Automobile Insurance Company (hereinafter AAIC) established its prima facie entitlement to judgment as a matter of law by demonstrating the applicability of an exclusion in the plaintiff’s policy (see Platek v. Town of Hamburg, 24 NY3d 688, 694; Alvarez v. Prospect Hosp., 68 N.Y.2d 320, 324–325).

In opposition to AAIC’s prima facie showing, the plaintiff failed to raise a triable issue of fact regarding the applicability of an exception to the exclusion (see Platek v. Town of Hamburg, 24 NY3d at 694; Zuckerman v. City of New York, 49 N.Y.2d 557, 562; Broome County v. Travelers Indem. Co., 125 AD3d 1241).

Accordingly, the trial court properly granted AAIC’s motion for summary judgment declaring that it is not obligated to provide insurance coverage to the plaintiff for the loss to its property.

Since this is, in part, a declaratory judgment action, the matter must be returned to the trial court for the entry of a judgment declaring that AAIC is not obligated to provide insurance coverage to the plaintiff for the claimed loss.

ZALMA OPINION

When an insurer establishes the existence and application of an exclusion, the insured must carry the burden of producing evidence establishing that the exclusion does not apply and that there is coverage. When the insured fails to produce evidence that a loss is covered and the exclusion does not apply or that there are no facts to support the exception to the exclusion, the court must rule in favor of the insurer.

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