Alberino v. Sea Insurance Co., 79 N.Y.2d 98 (1992)
When an insurance policy’s language is ambiguous regarding coverage, the ambiguity must be resolved in favor of the insured, especially when the insurer failed to issue a timely disclaimer.
Summary
This case concerns whether an insurance policy issued to Robert Alberino covered his wife, Dorothy, and son, Thomas, for an accident involving Dorothy’s car, driven by Thomas. Sea Insurance Co. argued its policy didn’t cover the incident and thus a late disclaimer was irrelevant. The New York Court of Appeals held that because the policy language was ambiguous, it must be construed in favor of the Alberinos, compelling Sea to defend and indemnify them. The court emphasized that exclusions must be clear and unambiguous, and the presence of specific exclusions suggested broader initial coverage. The failure to timely disclaim further solidified Sea’s obligation.
Facts
Thomas Alberino, driving a car owned by his mother, Dorothy Alberino, was involved in an accident with Florence Handelsman. Handelsman and her passenger, Ann Samochwal, sued Thomas and Dorothy Alberino. Dorothy’s husband, Robert Alberino, had a separate insurance policy with Sea Insurance Co. covering two other vehicles. Sea Insurance Co. failed to issue a timely disclaimer of coverage for Dorothy and Thomas under Robert’s policy.
Procedural History
The Handelsmans sought a declaratory judgment that Sea Insurance was obligated to defend and indemnify Dorothy and Thomas Alberino. The Supreme Court ruled in favor of Sea, stating the policy didn’t cover the accident. The Appellate Division affirmed this decision. The New York Court of Appeals granted leave to appeal.
Issue(s)
Whether the insurance policy issued to Robert Alberino, which includes “family members” as insureds, covers Dorothy and Thomas Alberino for liability arising from an accident involving a vehicle owned by Dorothy and driven by Thomas, given the policy’s potentially conflicting clauses and Sea Insurance Co.’s failure to issue a timely disclaimer.
Holding
Yes, because the insurance policy’s language is ambiguous regarding the scope of coverage for family members, it must be construed in favor of the insureds, Dorothy and Thomas Alberino. Sea Insurance Co.’s failure to issue a timely disclaimer further solidifies its obligation to defend and indemnify.
Court’s Reasoning
The court focused on the policy’s definition of “insured,” which included “you or your ‘family member’ for the ownership, maintenance or use of any auto.” Since Dorothy and Thomas qualified as family members, this clause seemingly provided coverage. Sea Insurance Co. pointed to another clause that limited coverage when “the person or organization does not own or hire the auto.” However, the court found this clause ambiguous regarding its relationship to the family member coverage. The court stated, “Where there is ambiguity as to the existence of coverage, doubt is to be resolved in favor of the insured and against the insurer.” The court also noted the existence of specific exclusions for vehicles owned by the policyholder or family members. The court reasoned that if the general coverage was already limited to non-owned vehicles, these exclusions would be superfluous, implying broader initial coverage. The court distinguished this case from Zappone v Home Ins. Co., noting that the policy language in Zappone explicitly limited coverage to “non-owned” automobiles. Here, the policy covered damages “for which any ‘insured’ becomes legally responsible because of an auto accident,” a broader formulation. Because Sea Insurance failed to issue a timely disclaimer and the policy was ambiguous, the court held Sea Insurance was obligated to defend and indemnify Dorothy and Thomas Alberino.