New York Federal Court Finds A&B Exclusion With Sublimit Is Just a Sublimit

In Homesite Insurance Co. v. WWMD Corp., decided in September 2026, the insurer had issued a commercial general liability (CGL) insurance policy to the insured — WWMD Corp., doing business as Kelly’s Pub — with a structured sublimit for assault and battery. The endorsement first contained a complete exclusion for claims to recover damages for bodily injury arising from assault and battery. But it went on to state that the insurer agreed to waive the exclusion and extend coverage for such bodily injury up to a limit of $100,000.

Unfortunately, the plaintiff’s father was stabbed at the insured’s pub and died of his injuries. Despite an inquiry by the insurer, the insured did not make a written claim. Months later, the plaintiff sued the insured in New York state court. In response, the insurer issued a reservation of rights letter, in which it agreed to defend the insured but reserved its rights to deny coverage beyond the $100,000 sublimit for bodily injury arising out of assault and battery.

Two years went by, during which the insurer, insured, and the plaintiff were unable to agree on the extent of the insurer’s liability under the policy, so the insurer sued its insured and the plaintiff in the Eastern District of New York, seeking a declaratory judgment that it owed no coverage beyond the $100,000 sublimit. The plaintiff — not the insured — brought a counterclaim for breach of contract, arguing that the insurer breached the insurance agreement by refusing to provide coverage up to the full limits of the policy (i.e., $2 million).

The plaintiff argued that the assault and battery endorsement was an exclusion. Thus, the plaintiff said, New York Insurance Law section 3420(d) required the insurer to timely send a disclaimer of coverage notification identifying the provision as the basis for the disclaimer, which all parties agreed the insurer had not timely sent such a disclaimer. In support of this argument, the plaintiff pointed out that the endorsement modified the exclusions section of the bodily injury and property damage coverage part, and was structured as an exclusion first, and then a waiver.

The court, however, rejected this argument. As it explained, the insurer had not disclaimed coverage at all. In fact, it had agreed to defend the insured in the underlying action and to indemnify the insured up to the $100,000 sublimit. Thus, despite its structure, the endorsement was not actually an exclusion — it was just a sublimit. Accordingly, the court concluded that New York Insurance Law section 3420(d) did not require the insurer to send a disclaimer notice, so its failure to timely do so did not constitute a breach of the insurance agreement.