Breen v. Cunard Lines, 33 N.Y.2d 508 (1974)
An insurance policy may limit liability coverage for loading and unloading of a vehicle to specific individuals or entities, such as lessees, borrowers, or employees of the named insured, pursuant to valid regulations by the Superintendent of Insurance.
Summary
Michael Breen, a truck driver, sued Cunard Lines for injuries sustained while unloading cargo. Cunard sought indemnity from Wooster Express’s insurer, Liberty Mutual, based on Wooster’s policy covering permissive users of the truck. The policy limited coverage for loading/unloading to lessees, borrowers, or Wooster’s employees. The court affirmed summary judgment for Liberty Mutual, holding that the policy limitation was valid under a regulation allowing such restrictions. The court reasoned that general statutory requirements for liability coverage do not preclude reasonable regulations defining the scope of coverage for loading and unloading operations. This case clarifies the extent to which insurance regulations can limit coverage mandated by broader statutes.
Facts
Michael Breen, a truck driver for Wooster Express, was injured on Cunard Lines’ pier when he fell through a broken board on a pallet while unloading heavy cases of paper from his truck.
Procedural History
Breen sued Cunard Lines for his injuries. Cunard then filed a third-party complaint against Liberty Mutual, Wooster Express’s liability insurer, seeking indemnity. The lower court granted summary judgment to Liberty Mutual, finding that Cunard was not covered under the policy’s loading/unloading provisions. The Appellate Division affirmed. The case then went to the New York Court of Appeals.
Issue(s)
Whether an insurance policy can validly limit liability coverage for loading and unloading of a vehicle to a lessee or borrower of the vehicle or an employee of the named insured, pursuant to a regulation of the Superintendent of Insurance, despite broader statutory requirements for liability coverage.
Holding
Yes, because the regulation of the Superintendent of Insurance permitting such limitation is valid and not in conflict with statutory provisions mandating liability coverage for permissive users of a vehicle. The statutory reference to “users” does not necessarily include every attenuated event associated with loading or unloading; therefore, the Superintendent has broad authority to define the scope of coverage.
Court’s Reasoning
The court reasoned that while Vehicle and Traffic Law § 345(b)(2) and Insurance Law § 167(2) mandate liability coverage for any party “using” the vehicle with the named insured’s permission, these provisions do not prevent a regulation from clarifying the extended coverage required for loading and unloading. The court acknowledged that the process of loading and unloading can be broadly construed, involving many parties and activities. However, it also noted that it may not be desirable or rational to extend the concept of “use” indefinitely. The court distinguished Wagman v. American Fid. & Cas. Co., 304 N. Y. 490, where the insurance policy expressly designated loading and unloading as a “use” of the vehicle for which all users were covered. Here, the statutory reference to “users” is general and does not automatically include every event associated with loading/unloading. The court emphasized the Superintendent of Insurance’s broad power to interpret and implement legislative policy, finding a rational basis for the regulation given the generality of the statutes, the indefiniteness of loading/unloading, and the practicalities of insurance rates. The court quoted, “Given the generality of the applicable statutes, the indefiniteness inherent to the loading and unloading process, and the practicalities of the overlapping of liability insurance and the insurance rate structure, there was a rational basis for the regulation by the Superintendent.” As Cunard was excluded by the policy provision pursuant to a valid regulation, it had no cause of action against Wooster’s insurer.