A trial court in New York recently was faced with questions concerning the amount of damages a contracting party, Citibank, was entitled to because of the failure of its contractor to procure insurance. (See Spector v. Cushman & Wakefield, 2012 N.Y. Misc. LEXIS 2794; 2012 NY Slip Op 3155U (Sup. Ct. N.Y. Co.)) Citibank sought all expenses incurred in connection with an underlying personal injury action, i.e., the amount of any settlement or judgment and reasonable attorneys’ fees, because Citibank was a self-insured party. In addressing damages, the court noted that New York’s highest court has held that, where a party intended to be insured by its contractor has its own insurance nonetheless, the measure of damages is limited to out-of-pocket expenses such as premiums and any additional costs incurred, including deductibles, co-payments and rate increases in the party’s insurance. (Inchaustegui v. 666 Fifth Avenue Limited Partnership, 96 N.Y.2d 111, 725 N.Y.S.2d 627 (2001)) However, that decision acknowledged that where the party was left uninsured, it could recover “the full amount of the underlying tort liability and defense costs.” (Id. at 114) In this recent June 2012 trial court decision, the court granted Citibank’s summary judgment motion for defense costs because it was self-insured.
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