First Department Applies New Jersey Law Due to Domicile of Insured

Travelers Cas. and Sur. Co. v. Honeywell Intern., Inc.
880 N.Y.S.2d 66, (1st Dept., 2009)

In a case involving a choice of law between New Jersey and New York, with respect to certain asbestos-related claims, the trial court chose New Jersey law and the First Department unanimously affirmed.

The court reaffirmed the settled doctrine that a contract of liability insurance is generally “governed by the law of the state which the parties understood was to be the principal location of the insured risk” citing to Certain Underwriters at Lloyd's, London v. Foster Wheeler Corp., 36 A.D.3d 17, 822 N.Y.S.2d 30 [2006], affd. 9 N.Y.3d 928, 844 N.Y.S.2d 773, 876 N.E.2d 500 [2007]. In Certain Underwriters, the First Department had held that “where it is necessary to determine the law governing a liability insurance policy covering risks in multiple states, the state of the insured's domicile [at the time of contracting] should be regarded as a proxy for the principal location of the insured risk” (id. at 24, 822 N.Y.S.2d 30), and that, for such purposes, a corporate insured's domicile is the state of its principal place of business, not the state of its incorporation (id. at 25, 822 N.Y.S.2d 30; see also Appalachian Ins. Co. v. Di Sicurata, 60 A.D.3d 495, 875 N.Y.S.2d 57 [2009] ).

Since it was undisputed that the principal place of the insured's business was New Jersey, it was immaterial that the insured had used a New York address on some of the policies, that it had used New York brokers, or that it had used New York amendatory endorsements on some of the policies. The court found it relevant that the "parties knew that the risks were spread nationwide". As such, it was appropriate to apply the law of the insured's domicile.

Practioner's Note:
This question of choice of law should not be confused with the issue of whether a policy was "issued for delivery in New York" for the purposes of New York Insurance Law 3420(d). See Preserver Insurance Co. v. Ryba, 10 N.Y.3d 635, 862 N.Y.S.2d 820(2008); American Ref-Fuel Company, v. Employers Insurance Co., 265 A.D.2d 49, 705 N.Y.S.2d 67 (2d Dep't 2000). Seemingly, a court could find that New Jersey law applied, and also find that the policy was issued for delivery in New York as long as there was a New York risk being insured.