Coverage for Post-Tender Remediation Costs Precluded as Voluntary Payments Where Insured Admitted and Assumed Liability Before Reporting Claim

A federal district court, applying New York law, has held that a “voluntary payments provision” precluded coverage for an insured’s post-tender costs to remediate its engineering errors because the insured admitted and assumed liability prior to reporting the claim or obtaining the insurer’s consent. Tindall Corp. v. Berkley Assurance Co., 2025 WL 677028 (W.D.N.Y. Feb. 21, 2025) (report and recommendation adopted on May 14, 2025).

A construction company sought coverage under a professional liability policy for costs incurred to remediate engineering errors it made in connection with concrete products for a water treatment plant. The insurer determined that the construction company admitted to providing non-conforming products, provided a proposal for remediating the installed products, and hired subcontractors to perform the remediation before reporting the claim or obtaining the insurer’s consent. The insurer thus denied coverage under the policy’s voluntary payments provision, which provided that the construction company “shall not voluntarily make any payment, assume or admit any liability, consent to any judgment, settle any First Party Claim or Claim, or incur any Claim Expense or Mitigation Cost, for which coverage may be sought under this Policy, without our prior written consent, except for Emergency Expense.”

In the ensuing coverage litigation, the construction company argued that the voluntary payments provision did not preclude coverage for the remediation costs because (1) the construction company did not make a formal “admission of liability” until after the remediation work was performed, which was after the claim was reported; (2) the construction company had no obligation to obtain the insurer’s consent for any remediation costs that were incurred after the insurer denied coverage; and (3) the insurer was equitably estopped from denying coverage because the insurer chose not to review the remediation plan and instead denied coverage.

Unpersuaded, the court concluded that no reasonable jury could find that the construction company’s numerous written communications acknowledging errors and the steps it took to formulate and propose remediation plans did not constitute an “admission of liability” before the claim was reported. The court further determined that even if the remediation work was performed after the insurer denied coverage, the construction company “had already admitted liability for those costs and thus failed to give [the insurer] a full opportunity to investigate, defend, or compromise the claims.” And the assertion of equitable estoppel was without merit in the court’s view because the insurer’s “mere silence on the remediation plan does not amount to a misrepresentation or falsehood.” The court thus held that the insurer properly denied coverage for the remediation costs on the grounds that the construction company admitted or assumed liability without consent.