On July 10 2009 the appellate division reversed the motion court's ruling in Sevenson Envtl Serrvices, Inc v Sirius Am Ins Co,(1) and held that :
- the insured's 15-month delay in providing notice of the claim was unreasonable as a matter of law;
- the insurer need not prove that it was prejudiced by the insured's untimely notice to disclaim coverage; and
- the insurer's disclaimer of coverage on late notice grounds 24 days after receiving notice of the claim was timely as a matter of law.
In Sevenson, the insured sought coverage under a commercial general liability policy that required the insured to notify the insurer of any accident or occurrence "which may result in a claim" as soon as practicable. The insured failed to notify its insurer of an accident resulting in injury to its employee for nearly 15 months. The insurer denied coverage 24 days after it received notice on late notice grounds. The insured subsequently filed an action for declaratory judgment in New York state court. The court granted the insured's motion for summary judgment, concluding that:
- the insured's delay in providing notice was not in breach of the policy;
- the insurer had not been prejudiced by the insured's delayed notice; and
- the insurer's disclaimer was untimely or otherwise defective for lack of specificity.
The insurer appealed and the appellate court for the Fourth Department reversed.
With respect to the timeliness of the insured's notice of claim, the appellate court held that the insured's 15-month delay was untimely and dismissed the insured's argument that its delay should be excused because it erroneously believed that its employee would only assert a workers' compensation claim, stating that that excuse was "unreasonable as a matter of law".
The appellate court also concluded that the insurer's disclaimer was timely as it was issued 24 days after it received the insured's notice of claim, and was sufficiently specific as it "apprised [the insured] with a high degree of specificity of the ground . . . on which the disclaimer was predicated."(2)
The appellate court further reversed the motion court's ruling to the extent it found the insurer's disclaimer void because it was not prejudiced by the insured's belated notice. In that regard, the court affirmed that "an insurer that does not receive timely notice in accordance with a policy provision may disclaim coverage, whether it is prejudiced by the delay or not" (citation and quotation omitted), and the recent amendments to Section 3420 of the Insurance Law reversing New York's no-prejudice rule only applies to liability policies issued on or after January 17 2009.(3)
For further information on this topic please contact Brian J Green at Edwards Angell Palmer & Dodge by telephone (+1 212 308 4411) or by fax (+1 212 308 4844) or by email (firstname.lastname@example.org). The Edwards Angell Palmer & Dodge InsureReinsure.com Blog can be accessed at www.insurereinsure.com.
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