Allstate Ins. Co. v DeMoura, 2011 NY Slip Op 50430(U)(App. Term 1st Dept. 2011)
“When an insurer “has paid the full monetary limits set forth in the policy, its duties under the contract of insurance cease” (Countrywide Ins. Co. v Sawh, 272 AD2d 245 ). A defense that the coverage limits of the policy have been exhausted may be asserted by an insurer despite its failure to issue a denial of the claim within the 30-day period (New York & Presby. Hosp. v Allstate Ins. Co., 12 AD3d 579 ), and an arbitrator’s award directing payment in excess of the $50,000 limit of a no-fault insurance policy exceeds the arbitrator’s power and constitutes grounds for vacatur of the award (see Matter of Brijmohan v State Farm Ins. Co., 92 NY2d 821, 822 ; Countrywide Ins. Co. v Sawh, 272 AD2d at 245; 11 NYCRR 65-1.1).”
This was an interesting case, and similar to a recent Second Department case, where the Court have held that a carrier can collaterally attack an arbitration award or judgment to the limited extent of determining whether complying with the award or judgment would cause the policy to exhaust.