Notice to Broker Is Not Notice to Liability Insurer -- Delayed Notice of More than 7 Months Found Unreasonable as a Matter of Law

CGL – LATE NOTICE – REASONABLE EXCUSE – NOTICE TO BROKER
2130 Williamsbridge Corp. v. Interstate Indem. Co.
(1st Dept., decided 10/16/2008)

A tenant of plaintiff's residential building allegedly tripped and fell in its lobby on December 28, 2004. On March 8, 2005, an attorney for that tenant notified plaintiff of that accident. Plaintiff's president immediately forwarded that letter to plaintiff's insurance broker, and when the summons and complaint were served, he personally delivered them to the broker as well. However, the broker did not forward the letter or the summons and complaint to Interstate's agent until October 24, 2005, more than seven months after receiving notification of the accident. Interstate disclaimed coverage based on late notice, and the insured commenced this declaratory judgment action for defense and indemnification coverage in relation to the tenant's underlying personal injury action. Plaintiff claimed it was unaware that its notice to the broker was insufficient.

In AFFIRMING Bronx Supreme's award of summary judgment to Interstate, the First Department held:

Where a policy of insurance requires that notice of an occurrence be given "as soon as practicable," that means within a reasonable period of time (Great Canal Realty Corp. v Seneca Ins. Co., Inc., 5 NY3d 742 [2005]). An insured's failure to comply with this condition precedent vitiates the contract. The carrier need not show prejudice before disclaimer [sic] based on the lack of timely notice. Even relatively short periods of unexcused delay are unreasonable as a matter of law (see Power Auth. of State of N.Y. v Westinghouse Elec. Corp., 117 AD2d 336 [1986]).

The insured bears the burden of establishing reasonableness of the proffered excuse. That the insured in such circumstances was unaware that notice provided to its broker was insufficient is no excuse (see Gershow Recycling Corp. v Transcontinental Ins. Co., 22 AD3d 460, 462 [2005]). Moreover, the policy contained an "Important Notice" listing a telephone number for reporting claims, and noting that all other correspondence should be sent to the broker. Plaintiff had only to read the policy to determine how to fulfill the condition precedent.

No prejudice showing required yet, that is. There will be for liability policies issued, modified or renewed on/after January 17, 2009.

It's always a good idea to actually read one's policy.