40-Day Delay in Giving Notice of Auto Accident Found Unreasonable As a Matter of Law

AUTO – LATE NOTICE – 40-DAY DELAY – NO GOOD-FAITH BELIEF OF NONLIABILITY
Young Israel Co-Op City v. Guideone Mut. Ins. Co.
(1st Dept., decided 6/5/2008)

Plaintiffs brought this DJ action for defense and indemnification coverage in relation to an underlying personal injury action that stemmed from a rear-end MVA. Guideone Mutual apparently had disclaimed coverage based on the insureds' 40-day delay in giving notice of the accident.

In REVERSING the lower court's award of summary judgment to the insureds and instead granting summary judgment to Guideone Mutual, the First Department held:

The court improperly found that plaintiffs' 40-day delay in notifying defendant of the motor vehicle accident was reasonable as a matter of law (citation omitted). Under the insurance policy at issue, which required "prompt notice" of any accident or loss, plaintiffs' timely forwarding of the claim letter was not adequate notice (see e.g. City of New York v Continental Cas. Co., 27 AD3d 28 31 [2005]). Given that plaintiffs were allegedly negligent in this rear-end collision and that the underlying claimant was taken away from the accident by ambulance (cf. Kelly v Nationwide Mut. Ins. Co., 174 AD2d 481 [1991]), plaintiffs failed to raise an issue of fact as to whether its delay in giving notice was reasonably founded upon a good-faith belief of nonliability (see Paramount Ins. Co. v Rosedale Gardens, 293 AD2d 235, 241 [2002]).

Late notice of only 40 days. No question that a 40-day delay is not "prompt notice", but this case ranks among the most stringent on insureds. Key factors in this case were: (1) that the MVA was a rear-end collision; and (2) that the insureds apparently were aware that the underlying claimant was taken away from the accident scene in an ambulance.