THE INSURER’S NEARLY TWO-MONTH DELAY BEFORE DISCLAIMING COVERAGE RENDERED THE DISCLAIMER UNTIMELY AS A MATTER OF LAW (FIRST DEPT).

The First Department, reversing Supreme Court, determined the insurer’s disclaimer of coverage was not timely as a matter of law. The delay in notification was about two months:

“[A] timely disclaimer pursuant to Insurance Law § 3420(d) is required when a claim falls within the coverage terms but is denied based on a policy exclusion” … . The purpose of Insurance Law § 3420 is to protect the insured, injured party, or any other claimant with an interest in the outcome, from prejudice based on a delayed denial of coverage … . “[T]imeliness of an insurer’s disclaimer is measured from the point in time when the insurer first learns of the grounds for disclaimer of liability or denial of coverage” … . The question as to whether the insurer disclaimed coverage as soon as reasonably possible after it first learns of the ground for disclaimer is necessarily case-specific … . “However, where there is no excuse or mitigating factor, the issue poses a legal question for the court, and courts have found relatively short periods to be unreasonable as a matter of law” … .

Here, defendant’s disclaimer, dated December 24, 2014, was untimely as a matter of law. Defendant’s position that it only received plaintiff’s claim on December 16, 2014 is unpersuasive. Defendant was on notice of the underlying accident several months before it disclaimed coverage and commenced an investigation with respect to the alleged accident. Therefore, defendant was sufficiently aware of the facts that would support a disclaimer, but waited almost two months before disclaiming coverage … . ADD Plumbing, Inc. v Burlington Ins. Co., 2021 NY Slip Op 01498, First Dept 3-16-21