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Towne Bus Corp. v. Insurance Co. of Greater New York

Other Lower Courts

January 18, 2008

Towne Bus Corp., Plaintiff,
v.
Insurance Company of Greater New York, Defendant.

Editorial Note:

This case is not published in a printed volume and its disposition appears in a table in the reporter.

OPINION

Emily Jane Goodman, J.

In this action, plaintiff Towne Bus Corp., an insured under a workers' compensation liability insurance policy, seeks the recovery of a policyholder dividend on a renewal policy. Defendant Insurance Company of Greater New York, the insurer, now moves, pursuant to CPLR 3212, for summary judgment dismissing the complaint. For the following reasons, the motion is granted.

BACKGROUND

The underlying facts are not in dispute. Plaintiff purchased a workers' compensation and employers' liability policy (policy No. 6631003142) from defendant, with a policy period from February 1, 1996 through February 1, 1997 (the original policy) (Hess Affirm., Exh. A, Information Page). Plaintiff was the named insured. The insurance applied to claims brought under the Workers' Compensation Law of the State of New York (id.). At the end of that policy period, defendant renewed plaintiff's policy for another year, for a period from February 1, 1997 through February 1, 1998 (the renewal policy) (Hess Affirm., Exh. B, Information Page). [1]

Part Six of the renewal policy permitted plaintiff to cancel the policy ( id., Part Six-Conditions [D] [1]). The renewal policy states that the "policy period will end on the day and hour stated in the cancelation notice" (id., Part Six-Conditions [D] [3]).

The policies were "audit premium" policies, where the insured pays estimated premiums, known as deposit premiums, based on estimated payroll for the coming year. After termination of the policy, the insurer audits the policy to determine the earned premium (the actual amount of premium owed to the insurer based on actual payroll information), and generally either refunds the difference to the insured or requires the insured to pay an additional amount. Specifically, Part Five of the renewal policy provides, in relevant part, that:

The premium shown on the Information Page, schedules, and endorsements is an estimate. The final premium will be determined after this policy ends by using the actual, not the estimated, premium basis and the proper classifications and rates that lawfully apply to the business and work covered by this policy. If the final premium is more than the premium you paid to us, you must pay us the balance. If it is less, we will refund the balance to you. The final premium will not be less than the highest minimum premium for the classifications covered by this policy.

( id., Part Five-Premium [E]). It further states that, if the insured cancelled the policy, final premium would be determined in the following way unless defendant's manuals provided otherwise: "final premium will be more than pro rata; it will be based on the time this policy was in force, and increased by our short-rate cancelation table and procedure. Final premium will not be less than the minimum premium" (id., Part Five-Premium [E] [2]).

With regard to dividends, the renewal policy states, as in the original policy, that:

Dividend: You shall participate in the earnings of the Company to such extent and upon such conditions as shall be determined by the Board of Directors of the Company in accordance with Law and as made applicable to this policy provided that you shall have complied with all of the terms of this policy with respect to the payment of premium.

(id., policy jacket [emphasis in original]).

By letter dated September 15, 1997, plaintiff cancelled its renewal policy effective October 15, 1997, several months before the expiration of the policy. An endorsement reflects that the renewal policy was cancelled at plaintiff's request. ...


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