In a decision notable for several reasons, the New York State Court of Appeals—the state’s highest court—reversed itself in K2 Investment Group, LLC v. American Guarantee & Liability Insurance Co. [21 NY3d 384 (2014)] and reaffirmed its earlier ruling in Servidone Construction Corp. v. Security Insurance Company of Hartford [64 NY2d 419 (1985)].
In doing so, the court reestablished the rule it pronounced in Servidone when it held that a liability insurer who determines not to provide a defense to its insured may still contest its duty to indemnify on the basis of an exclusion to coverage.
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The New York State Court of Appeals (New York’s highest court) has agreed to hear re-argument on K2 Investment Group LLC v. American Guarantee & Liability Insurance Company, 2013 N.Y. LEXIS 1461 (N.Y. June 11, 2013). In K2, the Court held that a liability insurer that declined to provide a defense to its insured on the basis that the liability alleged was not covered might waive all policy defenses if it was later held that a defense should have been supplied.
Continue reading NY Court of Appeals Revisits Controversial K2 Decision
The New York Court of Appeals rendered a decision June 11, 2013 holding “when a liability insurer has breached its duty to defend its insured, the insurer may not later rely on Policy exclusions” to avoid indemnification.
The ruling in K2 Investment Group, LLC, et al v. American Guarantee & Liability Insurance Company, 2013 NY Slip op. 4270 (N.Y., June 11, 2013) will significantly affect an insurer’s assessment of its duty to defend a claim tendered under a liability policy. The court held an insurer may be deprived of the ability to contest coverage for the indemnity of a claim when it determines not to afford a defense to the insured.
Continue reading K2 Investment: The New York Court of Appeals’ Recent Ruling Has Significant Impact on an Insurer’s Assessment of its Duty to Defend a Claim Under a Liability Policy