New York Appellate Court Permits Use of Extrinsic Facts to “Clarify Ambiguous Pleadings” and Establish the Applicability of a Policy’s Auto Exclusion

On October 23, 2018, our Global Insurance Services group hosted an interactive webinar discussing states’ varying interpretations of what is considered “loading and unloading” in the context of a liability policy’s “Aircraft, Auto or Watercraft” exclusion. During that presentation, we identified inconsistencies in the courts’ application of this provision when assessing an insurer’s duty to defend, particularly in New York. Ironically, that same day, a New York Appellate Court analyzing the application of a the “Aircraft, Auto or Watercraft” exclusion relied on facts extrinsic to the allegations in the underlying complaint to permit a liability insurer to avoid its duty to defend, which is something New York courts typically do not permit. In Zurich American Ins. Co. v. ACE American Ins. Co., 2018 N.Y. Slip. Op. 07074 (1st Dept. 2018), the New York State Supreme Court, Appellate Division, First Department, was tasked…

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