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Stradford v. Zurich Ins. Co. - 2002 U.S. Dist. LEXIS 24050

Rule:

Under New York law, the insured's cooperation is a condition precedent to coverage under an insurance policy and that summary judgment is appropriate where it is determined that an insured's conduct constitutes a breach of the policy's cooperation clause. Specifically, an insured's willful failure to appear for an examination under oath as required by a policy of insurance constitutes a material breach of the policy's cooperation clause and precludes the insured from recovering on the insurance contract.

Facts:

The dentist engaged in dental implant surgery. Defendants were affiliated corporate insurers. One of the insurance companies issued a policy on the dentist's office. The dentist failed to pay the required premiums and the insurance was cancelled. However, the dentist sent a "no claims" letter and resumed paying the premiums, so the policy was reinstated. Less than 10 days later, the dentist filed a claim for extensive water damage from frozen pipes to the property and the implants. The insurer paid the claims before receiving an additional claim. The insurer demanded a deposition concerning the claim, however the dentist failed to cooperate. Defendants argued that the lack of cooperation constituted a breach of plaintiffs' contractual obligations under the policy. 

Issue:

Whether the lack of cooperation constituted a breach of plaintiffs' contractual obligations under the policy.

Answer:

Yes.

Conclusion:

The court found that the breach precluded plaintiffs from recovering under the policy and required that plaintiffs return the advance payments made to them by the insurer. Plaintiffs' argument that the dentist had notice prior to the deposition that the claim was denied was not supported by the evidence which indicated that defendants were actively investigating the claim and had already made payments.

The sole ground on which defendants sought summary judgment was that Dr. Stradford breached the "cooperation clause" of his insurance policy by failing to appear for the continuation of examination and provide the documents requested by the insurer at the first day of the examination. Defendants contended, and the court agreed, that this breach precluded plaintiffs from recovering under the policy and required that plaintiffs return the advance payments made to them by the insurer in the amount of $ 151,154.74.

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