New York Court of Appeals Disavows the “Bellefonte Rule”

The New York Court of Appeals issued its ruling in the closely-watched Global v. Century case, holding that New York law “does not impose either a rule, or a presumption, that a limitation on liability clause necessarily caps all obligations owed by a reinsurer, such as defense costs, without regard for the specific language employed therein.” With that ruling, New York’s highest court gutted the much-decried “Bellefonte Rule.”

Under Bellefonte, facultative reinsurers avoided paying their proportional share of expenses in addition to indemnity limits where the reinsured policy paid expense in addition. Bellefonte and its progeny were widely criticized by industry professionals and ignored by arbitrators, but were followed in New York state and federal courts, and in courts in some other jurisdictions. Although the New York Court of Appeals limited its ruling in Global v. Century to the specific certified question presented by the Second Circuit, the implications of the decision are clear. The “Bellefonte Rule” has been unrung. Read the complete article at whiteandwilliams.com.

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