A New York state appellate court recently held that an insured’s failure to notify its insurer of an occurrence and the possibility of a claim until eight months after an accident breached the notice requirement of the liability policy in question. York Specialty Food, Inc. v. Tower Ins. Co. of N.Y., 2008 NY Slip Op 00614 (N.Y. App. Ct. Jan. 31, 2008).

In so holding, the court found that, “[a]lthough a good-faith belief in non-liability may excuse the failure to give timely notice,” the insured, who became aware of the claimant’s accident within three days, was not justified in its delay because, “[w]here a reasonable person could envision liability, that person has a duty to make some inquiry as to potential liability.” The court further noted that an investigation by the insured, including interviews of employees who witnessed the accident, would have revealed that the claimant was taken from the scene of the accident in an ambulance, which would lead a reasonable person to “envision” liability. Since no investigation was conducted, the insured could not claim a good-faith belief in non-liability.

Reaffirming New York law concerning notice and prejudice, the Court thus found that “[t]he insured's noncompliance with [the notice] requirement constitutes failure of a condition precedent, thus vitiating the contract as a matter of law, even without a showing of prejudice.”

For a copy of the York decision, please click here.