State Insurance Fund v. American Hardware Mutual Insurance
The State Insurance Fund (SIF) initiated an action seeking a declaratory judgment that the defendants were obligated to pay their proportionate share of settlement and defense costs from an underlying personal injury action. In the underlying case, an employee of World of Hitches N Rental, Inc., sustained injuries and settled for $1,475,000, with SIF, as World of Hitches' workers' compensation insurer, paying $750,000 and waiving a $225,000 lien. The defendants, who had issued commercial general liability and garage policies to World of Hitches, disclaimed coverage due to policy exclusions for employee bodily injury. However, the court found their disclaimer, issued over four months after notification, was untimely under Insurance Law § 3420 (d). The court also rejected the defendants' argument that the garage policy didn't cover the injury. Consequently, the defendants were obligated to defend and indemnify World of Hitches. The judgment was modified, reducing the defendants' required contribution to the settlement from $650,000 to $300,000, consistent with the policy limits and the mutual exclusivity clause.