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located in New York because all the borrowers were neither located or
resident in New York. Therefore, they could not have paid the notes from
New York and the Superintendent properly refused to find that
Manufacturer’s claims were allowable.
In the Matter of Liquidation of Union Indemnity Insurance Company of New
York, the Royal Bank & Trust Company. v. The Superintendent of Insurance
of the State of New York, 92 N.Y. 2d 107, 677 N.Y. S. 2d 228, 699 N.E. 2d 852
(1998). The Court of Appeals of New York concluded that the
Property/Casualty Insurance Security Fund (the “Fund”) was liable for postlitigation
interest and attorney’s fees which, the court reasoned, were an
“allowed claim” by an insured against the Fund. New York insurance law
states that a creditor is not entitled to interest on any dividend by reason of
delay in payment, but the court ruled this principle applies only to claims
against liquidation estates of insurance companies and is not applicable to
reimbursement sought under the Fund. Also, the phrase “limit of liability”
within the statute was not limited to the principal amount of financial
guaranty bonds. Therefore, the Fund was not precluded from paying postlitigation
interest and attorney’s fees as provided by the bonds.
North Carolina Hales v. North Carolina Insurance Guaranty Association, 337 N.C. 329, 445
S.E.2d 590 (1994). Action was brought on behalf of minor passenger injured
in automobile accident to recover under automobile liability policy from
Insurance Guaranty Association, which had assumed all rights and
obligations of insolvent insurer. Prior to the accident, the insurer had
attempted to terminate the policy due to non‐payment of the renewal
premium. Minor’s action was seeking declaration that policy was in effect
on date of accident. Minor’s father had earlier brought an unsuccessful
declaratory judgment action against the insurer seeking to establish
coverage, but the minor and his guardian were not parties to that action.
The court ruled that minor was not precluded from bringing action by the
doctrines of res judicata or collateral estoppel and that the court would not
adopt doctrine of virtual representation. In addition, the court concluded
that an entry of summary judgment in favor of the plaintiffs would be
inappropriate when a number of genuine issues of material fact remained
with regard to whether the plaintiffs possessed a “covered claim” within the
meaning of the Insurance Guaranty Association Act. The court noted that
the premium notice, which was sent by insurance agency and not by insurer,
stating that automobile liability policy was up for renewal and requesting
policyholder to pay premium amount before renewal date to avoid lapse in
coverage did not satisfy statutory requirements for a cancellation or refusal
to renew policy to be effective.
North Carolina Insurance Guaranty Association v. Burnette, 508 S.E.2d 837
(1998). North Carolina Insurance Guaranty Association sought declaratory
judgment that Catawba County Board of Education’s (“Board”) alleged
liability for collision between student and car was not covered claim under
Board’s primary and excess liability policies. Student answered seeking
declaratory judgment that claims were covered, and Board filed cross‐claim
alleging that it had not waived governmental immunity. The court held that
even though insolvent insurer provided the primary and excess coverage of
the Board under separate policies, the North Carolina Insurance Guaranty
Association’s responsibility is limited to the statutorily set amount of
coverage of $300,000 less the set‐off. In addition, the court concluded that
the Board’s waiver of governmental immunity was limited to the North
Carolina Insurance Guaranty Association’s obligation to pay the statutorily
set amount of coverage less the set‐off. Thus, the waiver was effective only
to the amount that the Board was indemnified.