The New York Insurance Department’s (“NYID”) Office of General Counsel (“OGC”) recently issued an OGC Opinion (No. 09-06-08) representing the position of the NYID in respect of four distinct queries regarding the recent amendment to Insurance Law § 3420, which we have closely followed and written about in this blog. (See, e.g., here, here, here and here.) Each issue addressed by this Opinion will be discussed in a separate blog post. (See here, here and here for the other issues addressed in the OGC Opinion).
Recent amendments to NY Insurance Law § 3420 provide that a liability insurer can disclaim coverage on late notice grounds only where the insured’s untimely notice has prejudiced the insurer. The statute further provides, in relevant part, that the initial burden of establishing prejudice will rest with the insurer if the delayed notice is within 2 years, but shifts to the insured to prove the absence of prejudice if the delay is longer than that.
The second issue addressed by the OGC was whether the new prejudice rule “only apply to liability policies” or “whether non-liability policies in New York may contain a prejudice rule.” In that regard, the Opinion states that although “Insurance Law § 3420 is limited to establishing minimum requirements for liability policies…[it] does not preclude an insurer from adding a similar prejudice provision in non-liability policies.” The OGC further affirmed that “[n]othing precludes an insurer from voluntarily including a prejudice rule in non-liability policies.”