New York Appellate Court holds that insurer’s disclaimer must address grounds applicable to injured party when injured party provides notice.

Under New York law, as a condition to potentially receive coverage an insured must provide its insurer timely notice of an occurrence and/or claim. Notice may also be satisfied directly by a party that seeks to hold an insured liable for that party’s injuries. In such an instance, if an insured wishes to disclaim coverage, it must address with specificity the grounds for disclaiming coverage applicable to the injured party as well as the insured. Issues may arise, however, when the insurer only notifies the insured that it is disclaiming coverage.

Such was the case in Pollack v. Scottsdale Ins. Co., 143 A.D.3d 794, 39 N.Y.S.3d 211 (N.Y. App. Div. Oct. 12, 2016). In Pollack, the New York Appellate Division held that an insurer could not preclude coverage where the injured party—and not the insured—complied with the policy’s notice provisions, but the insurer issued a disclaimer only to the insured.

On January 11, 2009, Loreley Pollack (Pollack) sustained injuries when she slipped and fell on ice outside of her residence in Staten Island, New York. Pollack lived in part of a multi-unit condominium that contracted with Florite Maintenance Corp. (Florite) to provide snow removal services. Florite obtained a general liability policy with Scottsdale Insurance Company (Scottsdale). The policy required Florite to provide Scottsdale with notice of an occurrence that could lead to a claim, and when there was a lawsuit based on a claim, “as soon as practicable.”

On March 31, 2009, Pollack notified Florite of the occurrence. Florite then notified Scottsdale. Subsequently, in March 2010, Pollack commenced a personal injury action against Florite. Florite did not answer or appear, and did not forward the matter to Scottsdale. Before seeking leave to enter a default judgment against Florite, Pollack notified Scottsdale of the underlying action. Scottsdale, however, notified Florite that it was disclaiming coverage due to Florite’s failure to comply with the policy's notice requirements.

A trial in the underlying action resulted in a jury verdict finding Florite twenty-five percent liable. Pollack brought suit against Scottsdale to recover the unsatisfied judgment against Florite. Scottsdale moved for summary judgment, arguing that the Pollack was not entitled to coverage because Pollack did not provide Scottsdale with timely notice. The New York trial court found in favor of Pollack, and Scottsdale appealed.

The Appellate Division affirmed the trial court’s holding. The court noted that where the notice of a suit is provided by the injured party, the insurer’s notice of disclaimer must address with specificity the grounds for disclaiming coverage applicable not just to the insured, but also to the injured party. This is because, the court reasoned, “notice of an occurrence by the injured party constitutes prima facie compliance with the notice requirements of the policy and, if unchallenged, relieves the insured of its contractual duty to provide proper notice.”

The court found that Scottsdale’s subsequent notice of disclaimer only addressed Florite’s failure to provide notice of the underlying action, and did not address the actual notice provided by Pollack, including whether Scottsdale considered Pollack’s notice to be untimely. Accordingly, the Court held that Scottsdale was precluded from disclaiming coverage on the basis of late notice.

As demonstrated in Pollack, under New York law an injured party may provide notice to the insurer, even though that party does not have an obligation under the policy to do so. Nevertheless, if disclaiming coverage on the basis of inadequate notice in such an instance, an insurer must address issues related to both the insured and the injured party, or risk waiving that defense.

Thank you to the New Jersey Insurance Coverage Group and legal intern Derek Prevete for their contributions.