At times when the economy slows, some insurance companies are reluctant to pay claims. We have successfully enforced policy requirements on behalf of clients. In one such instance a company refused to pay a multi-million dollar claim on an empty building that had been destroyed by arson, the insurance company claimed that the property had been approved for development and therefore the building to be demolished had no value. In addition, the insurance company refused to pay for any security services in order to secure the area after the fire. Our firm successfully argued that the value of property destroyed is the value as of the date of destruction, even though an application was submitted to demolish the building and develop the land before the fire. Value must be given to the building because no approval existed at the time of the fire. In addition, any security services provided to protect the damaged area (until the insurance company could render a decision) must be paid by the insurance company together with interest to the insured. Ultimately the insurance company paid our client $2.4 million for the empty building but refused to pay for security. The issue of the payment for security services went before the Appellate division. The Court decided in favor of our client, wherein it affirmed the lower court decision that ambiguous language in an insurance policy must be construed against the insurer. This case was published as cited as follows:
Supreme Court, Appellate Division, Second Department, New York.
May 20, 2008.
51 A.D.3D 883, 857 N.Y.S.2D 723
Background: In an action to recover damages for breach of an insurance contract, the Supreme Court, Nassau County.
Decision: The Supreme Court, Appellate Division, held that certain provisions in a commercial policy issued by the insurer to the insured which pertained to "Loss Conditions" were ambiguous and, therefore were construed against the insurer.
Affirmed. The test for ambiguity is whether the language in an insurance contract is susceptible of two reasonable interpretations.
T. Kevin Murtha & Associates, P.C., Westbury, N.Y. for respondents. Insured.