HNRK Coverage Corner

On February 13, 2024, the New York Appellate Division, First Department, issued a decision in Bay Plaza Mall, LLC v. Argonaut Ins. Co., holding that evidence regarding an insurer’s handling of “prior similar claims” was a relevant consideration in construing a CGL policy.

This coverage action arose from “two underlying personal injury actions brought by individuals who were injured while working on a project at premises owned by plaintiffs.” Affirming the motion court’s decision denying the insurers’ motion for summary judgment, the First Department noted that the insureds “have submitted evidence that [the insurers] provided coverage for 12 prior claims and contend they are bound by their own ‘practical construction’ of the policy, which presents an issue that cannot be resolved on summary judgment.” 

An insurer’s prior claims handling decisions can be relevant evidence in a coverage dispute. Insurers frequently resist providing discovery on such issues, despite case law confirming its relevance. See, e.g., Young Israel of New Hyde Park v. Philadelphia Indem. Ins. Co., 2009 WL 10745812, at *1 (E.D.N.Y. Oct. 16, 2009) (“Plaintiff has met its burden to show that claims arising from the July 2007 storm are relevant. The claims may tend to show defendant’s practices in interpreting relevant policy provisions. While defendant is free to argue before the trier of fact that those claims are dissimilar and therefore not proper comparisons, plaintiff is permitted to test and dispute that argument through the aid of discovery.”); Mariner’s Cove Site B Assocs. v. Travelers Indem. Co., 2005 WL 1075400, at *1 (S.D.N.Y. May 2, 2005) (“To properly interpret an insurance policy, it is necessary to discern how that contract has been interpreted in the past. To this end, documents regarding similar claims of other insureds, the drafting history of a policy, and claims manuals are relevant and discoverable in actions to recover insurance reimbursement.”) (emphasis added).

This decision from the First Department lends further support to the propriety of exploring and considering the insurer’s prior handling of similar claims.