All Risk Insurance Policy Did Not Cover Loss From Returning Property to Its Rightful Owner

On February 13, 2018, the First Department issued a decision in Dae Assoc., LLC v. AXA Art Ins. Corp., 2018 NY Slip Op. 01026, holding that an "all risk" insurance policy did not cover a loss from returning property to its rightful owner, explaining:

The all-risk policy at issue, which covered insured property for "all loss or damage to insured property," did not apply to plaintiff art gallery's contractual liability to purchasers of stolen artwork that was returned to its rightful owner. Defective title is clearly not a physical loss or damage from any external cause. Despite the fact that the phrase "loss or damage" in the policy was not qualified by terms such as "direct" or "physical," we may not, under the guise of strict construction, rewrite a policy to bind the insurer to a risk that it did not contemplate and for which it has not been paid. Title insurance has been regarded as a separate type of contract not falling within any of the three basic classes of insurance. It is not reasonable to interpret a policy so broadly that it becomes another type of policy altogether.

(Internal quotations and citations omitted).

This post relates to insurance coverage, a topic that is an important part of our practice and that is the sole focus of Schlam Stone & Dolan's Insurance Coverage Blog. Contact Schlam Stone & Dolan partner Bradley J. Nash, who heads the firm’s insurance recovery practice, at bnash@schlamstone.com, if you or a client have questions regarding insurance coverage.