2 No. 81
In the Matter of Worcester Insurance Company,
Respondent,
v.
Thomas Bettenhauser,
Appellant.
_________________________________________________________________
2000 NY Int. 80
This opinion is uncorrected and subject to revision before publication
in the New York Reports.
Kevin M. Fox, for appellant.
Robert D. Frankfort, for respondent.
_________________________________________________________________
KAYE, CHIEF JUDGE:
While driving his own automobile on November 22, 1995, appellant
Thomas Bettenhauser was seriously injured in a two-car accident. The
other driver's insurance policy had a $10,000 limit, and
Bettenhauser's policy did not include underinsurance coverage.
Accordingly, on February 1, 1996, Bettenhauser, who lived with his
parents at the time of the accident, filed an underinsurance claim
pursuant to their policy with respondent Worcester Insurance Company.
Over the next several months, Bettenhauser responded to Worcester's
demands for discovery and for a medical examination. In December 1996,
with Worcester's consent, Bettenhauser settled his negligence action
against the other driver for the policy limit of $10,000.
After settlement negotiations on the underinsurance claim stalled,
Bettenhauser served Worcester with a demand for arbitration, and the
arbitration was set down for March 24, 1997. Worcester then commenced
this special proceeding to permanently stay arbitration, urging for
the first time that "no coverage exists in respect to Thomas
Bettenhauser's claim for underinsured motorist benefits in that (he)
was operating his own vehicle at the time of the accident and was not
operating a vehicle owned by the policyholder." Supreme Court granted
the stay, concluding that the policy did not provide coverage "for
family members driving an automobile not covered by (the) policy." A
divided Appellate Division affirmed. Because Worcester failed to
timely deny coverage, we now reverse.
Analysis begins with the Worcester policy. The "Underinsured Motorists
Coverage" endorsement opens with the following "Insuring Agreement:"
SNIPPETS:
In the Matter of Worcester Insurance Company, Respondent, v. Thomas Bettenhauser, Appellant.
While driving his own automobile on November 22, 1995, appellant Thomas Bettenhauser was
The other driver's insurance policy had a $10,000 limit, and Bettenhauser's policy did not
Accordingly, on February 1, 1996, Bettenhauser, who lived with his parents at the time of the
After settlement negotiations on the underinsurance claim stalled, Bettenhauser served
Worcester then commenced this special proceeding to permanently stay arbitration, urging for
The "Underinsured Motorists Coverage" endorsement opens with the following "Insuring
We will pay damages which an 'insured' is legally entitled to recover from the owner or
While 'occupying' or when struck by, any motor vehicle owned by you or any 'family member'
Bettenhauser, on the other hand, argues that Worcester waived its right to invoke a policy
"If under a liability policy delivered or issued for delivery in this state, an insurer shall
Disclaimer pursuant to section 3420is unnecessary when a claim falls outside the scope of the
Under those circumstances, the insurance policy does not contemplate coverage in the first
By contrast, disclaimer pursuant to section 3420is necessary when denial of coverage is based
Co.,, 55 NY2d 131, 134, 138, now Insurance Law § 3420); see also, Jerge v Buettner,, 90 NY2d
As the split at the Appellate Division evidences, drawing the line between a lack of coverage
Zappone and Handelsman, however, illustrate the distinction and demonstrate why, in the case
Because the automobile involved in the accident was owned by a family member and was not
In Handelsman, by contrast, the coverage portion of the insurance policy required payment for
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