Recently, the New York Court of Appeals affirmed a decision from a New York appellate court, holding that an insured’s notice under one policy does not constitute notice under a second policy issued by the same insurance carrier. Sorbara Construction Corp. v. AIU Insurance Co., No. 157 (New York Court of Appeals, October 21, 2008), affirming Sorbara Construction Corp. v. AIU Insurance Co., 838 N.Y.S.2d 531 (App. Div. 2007).

According to the appellate court’s decision, the insured’s employee was injured in a workplace accident. The injured employee instituted a lawsuit against a third party. The insured notified the defendant excess insurer of the workplace accident under its workers compensation policy, but did not provide notice under a liability policy that it had also procured from the defendant. When the insured was itself sued by the third-party five and one-half years after the accident and tendered the defense to the insurer under the liability policy, the insurer denied coverage on the basis of late notice. In the subsequent coverage action, the appellate court held that the late notice barred coverage. It stated that a good-faith belief in non-liability might have excused the failure to give timely notice, but the appellate court found no evidence that the insured ever took action to ascertain whether it would be sued in connection with the workplace accident.

On appeal, the Court of Appeals affirmed the appellate decision, holding that “each policy imposes upon the insured a separate, contractual duty to provide notice.” The Court of Appeals further held that the five and one-half year delay was “unreasonable as a matter of law and relieved the insurer of its obligation to defend or indemnify the insured.”

For a copy of an unpublished version of the Court of Appeals’ decision, click here.