In August 2020 the Chenango County (NY) Supreme Court granted summary judgment to the insurer defendant in a case in which the policyholders complained to the police that their evicted tenants had made "unauthorized changes/renovations to the structure of the property." Upon receiving an estimate to repair the damage, the policyholders filed a claim with their insurer, Sterling Insurance Company, for approximately $63,000 due to "vandalism" claiming the damage was performed by the "intentional acts" of the occupants. Sterling denied the claim citing the policy's entrustment exclusion, which it asserted barred recovery in this situation.
The policy's "entrustment exclusion" reads:
4. Dishonest or Criminal Acts-means loss caused by or resulting from any dishonest or criminal act by you, any of your partners, employees, directors, trustees, authorized representatives or anyone, to whom you entrust property for any purpose:
a. Acting alone or in collusion with others; or
b. Whether or not occurring during the hours of employment.
This is exclusion does not apply to acts of destruction by your employees; but theft by an employee is not covered.
The PHs appealed to the Appellate Division, Third Department, and and their appeal will be argued on February 16, 2022 in the afternoon.
Oral arguments to the Third Department are live-streamed. I'll be watching. Will you?
The case is Daire v. Sterling Ins. Co. and Supreme Court's decision/order is here.
#propertyinsurance #entrustmentexclusion
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