Where a liability policy has been issued or delivered in the state of New York, insurers must timely disclaim automobile liability coverage for claims involving bodily injury or death. N.Y. INS. LAW §3420(d)(2). Insurers must give written notice “as soon as is reasonably possible of such disclaimer of liability or denial of coverage to the insured and the injured person or any other claimant.”
When N.Y. INS. LAW §3420(d)(2) was enacted by the New York Legislature, it was enacted to “aid injured parties” through encouraging the expeditious resolution of liability claims. See KeySpan Gas East Corp. v. Munich Reins. America, Inc., 23 N.Y.3d 583, 2014 WL 2573382 (N.Y. June 10, 2014) citing Allstate Ins. Co. v. Gross, 27 N.Y.2d 263, 267 (1970). Section 3420(d)(2) creates “a heightened standard for disclaimer that ‘depends merely on the passage of time rather than on the insurer’s manifested intention to release a right as in waiver, or on prejudice to the insured as an estoppel.” Allstate, 27 N.Y.2d at 269, 317 N.Y.S.2d 309, 265 N.E.2d 736.
It has long been the law of New York that §3420(d)(2) applied only in the particular context of insurance cases involving death or bodily injury claims arising from accidents occurring in New York involving insurance policies issued or delivered in New York. See, e.g., Preserver Ins. Co. v. Ryba, 10 N.Y.3d 635, 642 (2008). Section 3420(d)(2) only requires timely disclaimer for denials of coverage “for death or bodily injury.” First Financial Ins. Co. v. Jetco Contracting Corp, 1 N.Y.3d 64, 70, 769 N.Y.S.2d 459, 801 N.E.2d 835; Matter of Firemen’s Fund Ins. Co. of Newark v. Hopkins, 88 N.Y.2d 836, 837 (1996). Where the claim in question does not arise out of an accident involving bodily injury or death, §3420(d)(2) is inapplicable. Where §3420(d)(2) is inapplicable, the enforceability of the insurer’s notice of disclaimer is governed under common-law waiver and/or estoppel principles and is not barred “simply as a result of the passage of time.” Travelers Indem. Co. v. Orange & Rockland Utilities, Inc., 73 A.D.3d 576, 577, 905 N.Y.S.2d 11 (N.Y.A.D. 1st Dept. 2010); Allstate Ins. Co. v. Gross, 27 N.Y.2d at 269, 317 N.Y.S.2d 309.
In KeySpan Gas East Corp. v. Munich Reins. America, Inc., 23 N.Y.3d 583, 2014 WL 2573382 (N.Y. June 10, 2014), the New York Court of Appeals recently reaffirmed the above principles and reversed a trial court in an environmental contamination case where the trial court held that the insurance company had a duty to disclaim coverage “as soon as reasonably possible” after learning that the insureds’ notice of the environmental claims was untimely under the policies. The New York Court of Appeals held that environmental contamination claims that did not involve bodily injury or death did not fall within the scope of INS. LAW §3420(d)(2). Because §3420(d)(2) was limited to accidental death and bodily injury claims, courts were not free to extend the statute’s prompt disclaimer requirement beyond that legislatively intended boundary line. The case was remanded to the Appellate Division to determine whether the evidence supporting the insured’s common-law waiver defense was sufficient to defeat the insurers’ motion for summary judgment based on the failure, as a matter of law, to give timely notice under the policies.
Under a common-law analysis, the question before the trial court will be whether the insurers clearly manifested an intent to abandon their late notice defense under the facts presented. See, e.g., Fundamental Portfolio Advisors, Inc. v. Tocqueville Asset Mgmt., L.P., 7 N.Y.3d 96, 104 (2006); Gilbert Frank Corp. v. Federal Ins. Co., 70 N.Y.2d 966, 967 (1988).
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