Loss transferNovember 2, 2016
Matter of DTG Operations v AutoOne Ins. Co., 2016 NY Slip Op 07133
For all that has been written in assigned first-party litigation, there has been an equal dearth of writing on loss transfer issues. There are plenty of loss transfer cases; just very few of them make it passed Arb forums.
This case was interesting because it involved a loss transfer case brought due to the cv vehicle being insured a passenger policy of insurance yet being used as livery vehicle. While the cv insurance vehicle carrier had the right to disclaim, I am left to assume that knowledge of the true use of the vehicle came after payments were made or denials issued on grounds other than fraudulent procurement. Like many things in life, this leads the carriers into the murky area of intercompany arbitration.
CV insurance carrier notwithstanding insuring vehicle as a passenger vehicle filed (it appears) a demand for loss tranfer on the grounds that it was a for hire vehicle. Without reading the record and looking at the decision from the Court, the Adverse vehicle argued that CV vehicle was a passenger vehicle and had no right to engage in inter-company arbitration. DTG struck out at arb forums, Supreme Court and now at the Appellate Division.
“The AutoOne vehicle had been registered as a livery vehicle for the five years prior to the accident, and the change of registration — just five days prior to the date of loss — was orchestrated by an insurance agent who was illegally insuring “dollar vans” as personal use vehicles. All four of the injured passengers confirmed that the AutoOne vehicle was being used as a vehicle for hire and for commercial purposes on the accident date, and the registration on the AutoOne vehicle was switched back to a “livery” vehicle shortly following the accident. Thus, there was adequate support for the arbitrator’s finding that the AutoOne vehicle was being used, “principally,” for the “transportation of persons or property for hire,” and loss transfer applied (Matter of State Farm Mut. Auto. Ins. Co. v Aetna Cas. & Surety Co., 132 AD2d 930 [4th Dept 1987], affd 71 NY2d 1013 ; Matter of 20th Century Ins. Co. [Lumberman’s Mut. Cas. Co.], 80 AD2d 288, 290 [4th Dept 1981]).”