Insurance law follows socio-economic trends. In 2024, policyholders attempted to find coverage for newly developing torts under general liability policies, but largely without success. Policyholders suffered defeats on coverage for opioids, lead paint, greenhouse gases, and sex abuse allegations, as courts refused to extend the coverage afforded by the general liability policy to policyholders’ evolving liabilities. This is a troubling development, as the protection afforded by the general liability policy is supposed to evolve to match the changing liabilities of policyholders. We expect that 2025 will see continued battles for coverage in these areas.

Rockefeller University V. Aetna: Policyholder’s Bad Faith And N.Y. Gen. Bus. Law § 349(A) Claims Survive Motion To Dismiss.

In Rockefeller University v. Aetna Casualty & Surety Company, 231 A.D.3d 457 (1st Dept. 2024), the policyholder’s allegations include causes of action that Aetna breached the implied covenant of good faith and fair dealing (the fourth cause of action) and Aetna violated New York General Business Law § 349(a) (the fifth cause of action). Id. The First Department, affirming the Supreme Court, New York County’s decision, denied Aetna’s motion to dismiss these two causes of action. Id. at 457.

Aetna’s arguments to dismiss the fourth cause of action failed for two reasons: (1) the bad faith cause of action is not duplicative of the contract claims; and (2) the complaint sufficiently alleges facts demonstrating Aetna’s gross disregard of the policyholder’s interests. Id. at 457-58. First, two claims are not duplicative because they do not arise out of the same facts. Id. at 457. “Rather, the cause of action for breach of covenant arises out of the ways in which defendant insurers have allegedly frustrated the purpose of the policies at issue . . . ” Id.

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