Monday, April 28, 2008

Late Notice of Occurrence -- 7-Month Delay Found Unreasonable

Tower Ins. Co. of New York v. Ubah
(Sup.Ct., New York Co., decided 4/14/2008)

In Tower Ins. Co. of New York v. Ubah, 2008 NY Slip Op 31133(U)(Sup.Ct., New York Co., decided 4/14/2008), the court granted summary judgment to Tower, holding that the insured's 7-month delay in reporting an accident with injury on the insured's property was unreasonable as a matter of law. The insured had learned of the accident on June 6, 2005, was served with a complaint on December 5, 2005, and notified her broker on January 12, 2006. Tower received the complaint on January 13, 2006 and issued a disclaimer on February 10, 2006. In her signed statement given to Tower's investigator, the insured had acknowledged that she had learned of the accident and that the claimant had been taken away by ambulance on the day it happened. She also knew that a fire truck had shown up and that later that day someone had come by to take pictures of the scene.

In noting that the "issue is not whether the insured believes he will ultimately be found liable for the injury, but whether he has a reasonable basis for the belief that no claim will be asserted against him" (emphasis added), the court held that the insured's subjective belief that a claim would not be made against her, standing alone, was insufficient to exempt her from the notice requirement of the policy. The court found no extenuating factors which could have been associated with a reasonable belief that a plaintiff would not assert a claim, such as where there is no indication of injury or no defect at the accident site.

The court summarily rejected as "not supported by case law" the insured's further argument that Tower's 28-day delay in issuing its disclaimer was unreasonable.

Under the law of the First Department, a good faith belief in non-liability is an actual belief that no claim will be asserted, rather than the converse, viz, a lack of any belief that a claim will be made. This is an important distinction that should be made in investigating and assessing late notice situations and potential coverage defenses.


Heidi said...

I thought "no harm, no foul" was the rule when it came to courts rendering decisions against insurers for disclaiming coverage based solely on late notice. In other words, the insured could have had first hand knowledge of the accident, felt he/she was not liable and not report it to the carrier until receipt of a letter of representation or a S&C. This case, and the previous case you have cited on your blawg seems to contradict that theory

Roy A. Mura said...

Feelings, nothing more than feelings...

No, I don't think most NY courts will accept an insured's "because I thought I wasn't liable but really didn't do anything to confirm that feeling" excuse for late reporting. The standard seems to have become the following: the duty to give notice arises when, from the information available on the accident, the insured could glean a reasonable possibility of the policy's involvement. Could glean. Not did glean. These two cases can be read to provide that an insured, when aware of an accident resulting in injury, must do SOMETHING to determine whether a claim will be made and the policy will be involved.

Do ask. Do tell. Not the opposite.