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counterclaim for estimated damages it might have to pay its employees for
injuries sustained before the insurer's insolvency was properly stricken as
unliquidated and presently unprovable losses in an action by the insurer's
receiver for premiums due on the policies other than those covering liability for
such damages.
Smith v. Hunterdon Co. Mutual Fire Ins. Co., 41 N.J. Eq. 473, 4 A. 652 (1886). A
mutual fire insurance company reinsured all its risks and had a large sum of
money remaining which consisted of cash payments made by policyholders,
past and present, and the interest on the investments of those payments. The
court held that policyholders who had contributed to the sum were entitled to
a portion of it, ratably according to their payments, regardless of whether they
were policyholders at the time of distribution.
New York
Atty. General v. Continental Life Ins. Co., 91 N.Y. 647 (1883). Policyholders
surrendered their policies in exchange for new ones of equal amount at
reduced premiums. At the time of the exchange, they released the company
of all claims against it under the old policies. The company then became
insolvent. The court held that the policyholders should have been allowed the
value of the new policies as claims against the company's assets held by the
receiver.
In re First Cent. Ins. Co., 791 N.Y.S. 2d 123 (App. Div. 2005). Where the insurer
received timely notice of the policyholder’s claim, acknowledged receipt of the
claim, and agreed to provide a defense before liquidation proceedings were
instituted, the Superintendent of Insurance as liquidator failed to demonstrate a
sufficient basis to disclaim coverage for defense of claims for lead poisoning
injuries alleged by tenants of the insured apartment owners.
In re General Indemnity Corporation of American, 256 A.D. 172, 8 N.Y.S.2d 952
(1939). An automobile liability insurer went into liquidation. By so doing, it
failed to fulfill its contractual obligation to assume the defense of a suit against
an insured. The insured was entitled to an allowance of a claim in the
liquidation proceeding equal to the amount it paid in the defense of the suit
against it.
In re Liquidation of Ideal Mut’l Ins. Co., 663 N.Y.S.2d 173 (App. Div. 1997). A New
York statute denying interest to creditors of an insolvent insurer for delay in
paying dividends did not preclude an insured from recovering interest from the
insolvent insurer which the insured paid on a judgment in the underlying action,
as provided in the liability insurance policy.
In re Liquidation of Midland Ins. Co., 861 N.Y.S. 2d 922 (N.Y. Sup. Ct. 2008).
Policyholders of an insolvent multi‐line carrier were not bound under either
state court decisions or the law of the case doctrine by a prior decision on
appeal in the insurance liquidation proceeding which held that New York law
applied to all claims in the liquidation proceedings, where the policyholders had
not been parties to the liquidation proceeding and did not have a full and fair
opportunity to be heard.
Paramount Communications, Inc. v. Gibraltar Casualty Company, 90 N.Y.2d
507, 663 N.Y.S.2d 133, 685 N.E. 2d 1214 (1997). This case involved a claim
against the New York Property/Casualty Insurance Security Fund. A
manufacturing subsidiary of Paramount Communications sold valves to a
power company. The valves were built in Rhode Island but were delivered
and installed at a power plant in New York. When the valves did not
function properly, a products liability action was brought against the
manufacturer. The action was settled, but one of the manufacturer’s excess
liability carriers, Integrity Insurance Company, had been declared insolvent.