On January 3, 2022, Justice Walker of the Eighth Judicial District Commercial Division issued a decision in Niagara BYG Capital, LLC v. Leatherstocking Coop. Ins. Co., 2022 NY Slip Op. 22015, an insurance policy provision that did not comply with Insurance Law § 3404 was unenforceable, explaining:
New York has codified a standard fire insurance policy at Insurance Law §3404(e). Any policy that insures against the peril of fire, such as the Policy herein, must incorporate terms and provisions no less favorable to the insured than those contained in the standard policy, as required by Insurance Law §3404(b)(1). Section 3404(b)(1) provides, in relevant part, as follows:
No policy or contract of fire insurance shall be made, issued or delivered by any insurer on any property in this state, unless it shall conform as to all provisions, stipulations, agreements and conditions with such form of policy [as set forth at subsection (e) hereof
Thus,
to the extent a particular policy omits or detracts from the minimum protections afforded by the standard fire policy, the provisions of the standard policy control and the non-compliant policy is enforceable as if it conformed with [the] requirements or prohibitions” of the standard policy
While the standard policy includes several exclusions, it does not include the Policy Exclusion upon which Defendant relies (or its equivalent). Where, as here, the subject exclusion impermissibly restricts the coverage mandated by statute’ it violates the New York insurance law.
For these reasons, the court rejects Defendant’s contentions grounded in the plain language of the Policy. The court agrees that the Policy Exclusion is clear on its face, and does not require an interpretation beyond the plain and ordinary meaning of its terms. The court declines to enforce the Policy Exclusion not because it is unclear, but rather, because it is in violation of Insurance Law §3404(e), as such section applies to losses caused by fires. While policy exclusions grounded in negligent entrustment have been held to apply to losses arising out of theft and vandalism, such exclusions do not apply to losses caused by fire (Insurance Law §3404[e]).
(Internal quotations and citations omitted).