Prejudice Not Required for Late Notice Disclaimer of UM Coverage

UM – STAGED INCIDENT – LATE NOTICE OF UM CLAIM – PREJUDICE SHOWING NOT REQUIRED
Matter of Allstate Insurance Co. v. DeLuca
(Sup. Ct., Nassau Co., decided 9/3/2008)

On April 29, 2002, Barabara DeLuca was involved in a motor vehicle incident with a vehicle owned by Myotte A. Francois and operated by Rome L. Kempbell. On the incident date, State Farm had an auto policy in force for the Francois vehicle.

By letters dated February 11, 2003, State Farm advised Francois, Kempbell, and DeLuca, through her attorney, that it was denying liability coverage because the "loss [was] not an accident." DeLuca then filed an uninsured motorists (UM) coverage claim with her own auto insurer, Allstate, and demanded arbitration, prompting Allstate to commence this special proceeding for a permanent stay.

After conducting a factual hearing, Nassau County Supreme Court Justice R. Bruce Cozzens, Jr. dismissed Allstate's petition against State Farm, finding that State Farm had established through testimony of its field investigator and his link analysis that "when the totality of the State Farm investigation is evaluated, it is determined that this accident conforms to a pattern of fraudulent accident claims."

With liability coverage from State Farm out of the picture, Allstate defended the UM claim based on DeLuca's 28-month late notice of her UM claim. Relying on Rekemeyer v. State Farm Mut. Auto. Ins. Co., 4 NY3d 468 (2005), DeLuca contended that Allstate was required to demonstrate prejudice from her delayed notice of her UM claim in order to disclaim coverage.

Noting that Rekemeyer involved a claim for supplementary uninsured motorists (SUM) or underinsured coverage benefits, Justice Cozzens distinguished Rekemeyer and Brandon v. Nationwide Mut. Ins. Co., 97 NY2d 491 (2002) and held that Allstate was not required to show prejudice from what he found to be DeLuca's unreasonable delay in notifying Allstate of her UM claim after learning of State Farm's disclaimer. Judgment for Allstate permanently staying arbitration of DeLuca's UM claim.