The Second Department determined the insured defendants had raised a question of fact whether a 17-month delay in notifying the plaintiff insurer of the “occurrence” was based upon a good-faith belief of nonliability. The court explained the relevant law:
Where, as here, an insurance policy requires that notice of an occurrence be given “as soon as practicable,” notice must be given within a reasonable time in view of all of the circumstances … . “However, circumstances may exist that will excuse or explain the insured's delay in giving notice, such as a reasonable belief in nonliability” … . It is the insured's burden to demonstrate the reasonableness of the excuse … .
In general, whether there existed a good faith belief that the injured party would not seek to hold the insured liable, and whether that belief was reasonable, are questions of fact for the fact-finder … . Summary judgment may be granted in favor of the insurer only if the evidence, construing all inferences in favor of the insured, establishes as a matter of law that the insured's belief in nonliability was unreasonable or in bad faith … .
… The plaintiff established its prima facie entitlement to judgment as a matter of law by demonstrating that the insured defendants were notified of the injured party's workers' compensation claim approximately 17 months before they notified the plaintiff of the occurrence … . Since the subject insurance policies were issued in 2008, prior to the amendment to Insurance Law § 3420 (for policies issued after January 17, 2009), the plaintiff did not have to show that it was prejudiced by the failure to provide timely notice in order to satisfy its prima facie burden … .
In opposition, however, the insured defendants raised a triable issue of fact as to whether the delay was reasonably based on a good-faith belief of nonliability … . Aspen Ins. UK Ltd. v Nieto, 2016 NY Slip Op 01449, 2nd Dept 3-2-16
INSURANCE LAW (QUESTION OF FACT WHETHER DELAY IN NOTIFIYING INSURER BASED UPON GOOD FAITH BELIEF OF NONLIABILITY)/NOTICE OF OCCURRENCE (INSURANCE LAW, QUESTION OF FACT WHETHER DELAY IN NOTIFIYING INSURER BASED UPON GOOD FAITH BELIEF OF NONLIABILITY)