Shelby Cas. Ins. Co. v. Compono

In this declaratory judgment action, the Appellate Division, Second Department addresses an insured’s homeowner’s policy exclusion that excludes coverage for personal liability to an “insured,” including the policyholder and relatives residing in the policyholder’s household. The crux of this decision is that insured’s failed to raise a triable issue of fact that the policyholder’s injured daughter did not live in the policyholder’s residence to defeat the insurer’s summary judgment motion.

This declaratory judgment action involves the allegation that the policyholder’s dog bit the policyholder’s daughter. The daughter commenced an underlying personal injury action against her mother, the policyholder. The policyholder submitted the claim to her insurer, the issuer of her homeowner’s insurance policy for defense and indemnification. The insurer commenced this declaratory judgment action for a judgment declaring that it was not obligated to defend or indemnify the policyholder in the underlying action. The insurer moved for summary judgment.

The homeowner’s policy contained an exclusion that excluded, among other things, bodily injury to an “insured,” including the policyholder and any relative residing in her household. The plaintiff established its prima facie entitlement to summary judgment by proffering evidence that the daughter was residing in the policyholder’s home at the time of the incident. The policyholder did not raise a triable issue to defeat the summary judgment motion and, instead, conceded that the two lived together in the policyholder’s single-family home, sharing a kitchen, dining area, living room, bathroom, and telephone line. The Court inferred from the concession that the daughter had some sense of permanence and intention to remain in the policyholder’s residence.

One of the reasons for this type of exclusion is to avoid morale hazards — that is, a condition that increases a sense of carelessness or indifference as to the insured.