Extra-Contractual Damages in New York: How Much Has Changed?

March 2011
The Insurance Coverage Law Bulletin, an ALM publication
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It has been three years since the New York Court of Appeals issued its decisions in Bi-Economy Market, Inc. v. Harleysville Ins. Co., 10 N.Y.3d 187, 886 N.E.2d 127 (2008), and Panasia Estates, Inc. v. Hudson Ins. Co., 10 N.Y.3d 200, 886 N.E.2d 135 (2008), permitting policyholders to recover consequential damages, at least in certain circumstances, in cases involving insurer bad faith. Bi-Economy and Panasia were each decided over a strong dissent that warned that the cases represented a sharp break from prior New York law imposing stringent standards for the recovery of extra-contractual damages in insurance cases. See Bi-Economy, 10 N.Y. 3d at 196-197, 886 N.E. 2d at 133 (Smith, J., dissenting).