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Home Is Where The Heart Is For UIM Benefits (NY)

January 24, 2020

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In a recent decision by the New York Appellate Division, Second Department, the Court refused to dismiss a lawsuit seeking underinsured motorist benefits for the estate of a deceased pedestrian.  In <em><a href="">Jian Liang v Progressive Casualty Insurance Company</a>,</em> the Court stated that there were factual issues, as to whether the pedestrian, who was the insured's mother, was a "relative" pursuant to the terms of the insurance policy.
<p style="text-align: justify;">By way of background, Rui Liang and Zhi Lu purchased auto insurance from Progressive Casualty Insurance Co. The couple provided a Randolph, Vermont, address on the application and listed themselves as the only two household residents and drivers. The auto policy, which was renewed several times, contained an uninsured/underinsured motorist provision that applied to named insureds Liang and Lu or a "relative." The policy defined "relative" as "a person residing in the same household" as the named insured and related by blood or marriage.</p>
<p style="text-align: justify;">Liang's mother, Bi Guan, was struck and killed by an ambulette while crossing a street in Brooklyn. At the time of the accident, Guan lived in a house in Brooklyn owned by Liang and Lu. The plaintiff sued Progressive for breach of contract and bad faith after the insurer refused to pay UIM benefits for Guan under Liang and Lu's policy. The Kings County Supreme Court denied the insurer's motion for summary judgment. Progressive appealed, arguing that the policy required Liang and Guan to reside in the same household for Guan to be covered under the underinsured motorist provision.</p>
<p style="text-align: justify;">The Appellate Court concluded that there were factual issues as to whether Liang resided at the property. The Court noted that in an affidavit in opposition to Progressive's summary judgment motion, Liang indicated that she and Lu began working and living in Vermont in 2002, but she considered the Brooklyn premises her second home. In addition, she said her three sons lived in the Brooklyn house until each went to college and then continued to live there from time to time. Liang also said she stayed at the house seven or eight times a year in addition to holidays and vacations and kept clothes and other personal items there. Although Liang had a Vermont driver's license, the court noted that her tax returns listed the Brooklyn address and that she served as a juror in New York. Ultimately, the Court concluded that Progressive failed to prove that Liang had made a misrepresentation on the insurance application, as "household residents" was not a defined term in the application and was, therefore, ambiguous. However, the Second Department also noted that the trial court should have granted summary judgment in favor of the insurer on the bad-faith cause of action. It stated, “Progressive conducted an investigation and had an arguable basis for disclaiming coverage.”</p>
<p style="text-align: justify;"><em>Liang</em> is an interesting New York case for purposes of analyzing coverage issues where terms in an insurance policy are undefined. Bi Guan undoubtedly would have met the definition of “relative.” However, it is possible if the term “household residents” has been defined in the policy, Bi Guan’s estate may not have qualified for coverage.</p>
<p style="text-align: justify;">Thank you to Joseph S. Anzalone for his contribution to this post.  Please email <a href="">Colleen E. Hayes</a> with any questions.</p>

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