First Department's Exception to the No-Prejudice Rule in Liability Insurance

I've significantly expanded my original post of December 10th and done an analysis of the First Department's ruling in American Tr. Ins. Co. v Rechev of Brooklyn, Inc.  

 Do the First Department's rulings in that case and others conflict with the Court of Appeals' 2005 decision in Argo Corp. v Greater N.Y. Mut. Ins. Co.?  Read about it here and draw your own conclusions.