October 14, 2009
New York's Appellate Division, Second Department issued a recent ruling confirming the principle that an insurer is under no obligation to issue a coverage disclaimer for claims falling outside the scope of the policy's coverage grant. That decision, Siragusa, et al. v. Granite State Insurance Co., et al., 2009 N.Y. Slip Op 06678 (2nd Dept, September 22, 2009) illustrates a significant limitation of New York's statutory requirement that insurers provide prompt written notice of intent to deny coverage.
The plaintiff in Siragusa, a resident living in an apartment sponsored by the policyholder, was injured in a pedestrian knock-down accident near the policyholder's premises. After the vehicle's insurer tendered policy limits, plaintiff sought supplemental uninsured/underinsured motorist (SUM) benefits from the policyholder's insurer, Granite State. Five months after plaintiff claimed coverage, Granite State denied coverage on the ground that the plaintiff was not insured under the policy's SUM endorsement. Plaintiff challenged the coverage denial, arguing that the denial had not been timely asserted and therefore the asserted defense had been waived.
By statute, an insurer on a policy issued for delivery in New York must disclaim coverage in writing for claims alleging death or bodily injury "as soon as is reasonably possible." New York Ins. Law 3420[d]). Determining whether the disclaimer is issued "as soon as is reasonably possible" is a fact-specific exercise. New York courts have found unexcused delays of as few as forty-eight (48) days to be unreasonable.
However, as the Siragusa court recognized, disclaimer is unnecessary when a claim falls outside the policy's coverage grant. (Claims failing within the coverage grant, but barred by exclusions, are treated differently). Thus, where the claim falls outside the coverage grant, there is also "no statutory obligation to provide prompt notice of the disclaimer." Granite State successfully argued that the policy was never intended to cover a party such as plaintiff, who did not fit within the SUM endorsement's "insured" definition. Thus, the Court concluded, the insurer was under no obligation to deny coverage and - as a consequence - could not have waived its rights by issuing an untimely coverage denial.
For copy of the Siragusa decision, or for further information regarding our insurance coverage capabilities, please feel free to contact Michael Case or Fred Reif at 212-697-6555 or by email at
mcase@brhr.com and
freif@brhr.com.
