Insurer Estopped (pursuant to Insurance Law 3420) from Disclaiming Coverage Re: Previously Incurred Defense Costs in a Personal Injury Action

The Second Department determined Insurance Law 3420(d)(2) applied and the insurer, Rutgers Casualty, was estopped from disclaiming coverage for previously incurred defense costs in connection with an underlying personal injury action:

Pursuant to Insurance Law § 3420(d), an insurance carrier is required to provide its insured and any other claimant with timely notice of its disclaimer or denial of coverage on the basis of a policy exclusion, and will be estopped from disclaiming liability or denying coverage if it fails to do so … . Although Insurance Law § 3420(d)(2) does not apply if the underlying claim does not involve death or bodily injury …, contrary to Rutgers Casualty’s contention, this provision is applicable where, as here, the coverage the defendant seeks to disclaim is for defense costs incurred in connection with an underlying personal injury action. Accordingly, the plaintiffs made a prima facie showing of their entitlement to judgment as a matter of law, inter alia, declaring that Rutgers Casualty was estopped from disclaiming insurance coverage under the Policy by submitting evidence that it failed to provide a timely written notice of this disclaimer to Key Fat, a claimant in this litigation … . In opposition, Rutgers Casualty failed to raise a triable issue of fact.  Key Fat Corp vs Rutgers Cas Ins Co, 2014 NY Slip Op 06060, 2nd Dept 9-10-14