Intentional Acts and Uninsured Motorist Coverage

Nationwide Gen. Ins. Co. v Pontoon, 123 AD3d 1040 [2d Dept 2014]

Can an automobile carrier disclaim liability coverage for injuries sustained by an innocent passenger if the accident is determined to have been intentionally caused?

Montfort, Healy, McGuire & Salley LLP recently secured another victory in the Appellate Division, Second Judicial Department. The case involved an appeal by an insurance carrier from an order of the New York Supreme Court, which directed the carrier to provide liability coverage under its policy for injuries sustained by a passenger in an alleged staged collision.

The claimant alleged he was injured while riding as a passenger in a vehicle operated by nonparty driver. The vehicle in which he was traveling sideswiped a vehicle owned and operated by an individual who was insured by the insurance carrier. The injured passenger asserted a liability claim against the carrier’s insured. The insurance carrier disclaimed on the ground that the collision was staged, and thus was the result of an intentional act and not an accident.

The injured passenger then sought arbitration under the uninsured motorist provision of the policy of the driver, which was issued by Nationwide General Insurance Company. Nationwide commenced a proceeding to permanently stay the arbitration on the ground that the insurance carrier was required to provide liability coverage for the innocent passenger’s injuries, and thus the driver was not “uninsured.”

The arbitration was temporarily stayed pending a hearing. After several conferences, a hearing date was set.

Instead of conducting the hearing on that date, however, the referee granted Nationwide’s request to permanently stay the arbitration – without a hearing – based on her determination that the insurance carrier did not intend to prove that the injured passenger was complicit in staging the alleged accident as part of a fraudulent scheme.

On appeal, Appellate Division, Second Judicial Department disagreed with the referee’s decision. It held that, if the insurance carrier were able prove that the collision was staged, then there would be no liability coverage under its policy. The insurance carrier was not required to submit evidence as to whether the injured passenger was involved in staging the collision. The Second Department reversed the court referee’s order and remitted the matter to the Supreme Court, Kings County for a hearing.

Click here to read the court’s full decision.