The cooperation clause in an insurance is an important part of the insurance contract. If the policyholder does not cooperate in the reporting or investigation of a claim, the insurance that the policyholder has paid can be lost. In a later case, a policyholder whose employees lied to investigators proved to have violated the cooperation clause and the insurer was exempted from his duty to replace the policyholder.
Greater New York Mutual Insurance Co. v. Utica First Insurance Co. 2019 NY Slip Op 04041 (NY App. Div. May 1st, 2019), a fire caused damage to a building and to properties of different tenants in the building. The insurers of the owner / manager and the tenants paid their insured and sought recovery from the insurance company to the alleged forger whose employee is alleged to cause the fire through the negligent use of a torch to perform roof repairs. The insurance companies for the owner and the tenants received standard assessments against the alleged forger after the insurer waived insurance coverage and did not defend it in the underlying measures.
The insurer for the alleged injury was moved for summary judgment based on its disclaimer and lost at the motion court. The appeal division reversed and granted summary judgment for the alleged counterfeit insurance company. The Court of Appeal found that the insurer had no obligation to compensate for the alleged forgery since the alleged forger had not been able to provide fair and truthful information in the notification of the incident, which the Court held constitutes a breach of the cooperation clause as a legal issue. As the Court described, the alleged tortfeasors lied to the insurance company's investigator not to have used the torch on the roof.
The court argued that the alleged tortfeaser's failure to cooperate with the insurer's investigation released the insurance company its obligation to replace. In particular, the court did not have to face problems with the application of the policy's roofing and intentional offenses.