Monday, November 7, 2011

Question of Fact on Insured's Good-Faith Belief in Nonliability Staves Off Summary Judgment to Insurer on Insured's 8-Month Delayed Notice of Underlying Incident

Columbia Univ. Press, Inc. v Travelers Indem. Co. of Am.

(2nd Dept., decided 11/1/2011) 

Plaintiff insured's notice of a potentially covered incident was eight months delayed to its commercial liability insurer, Travelers.  Travelers disclaimed liability coverage based on the insured's late notice, and the insured commenced this declaratory judgment action.  Travelers moved for summary judgment and Supreme Court, New York County (Lefkowitz, J.), denied that motion.  Travelers appealed.

In AFFIRMING the order appealed from, the Appellate Division, Second Department, held that although Travelers had made a prima facie showing of its entitlement to summary judgment based on the insured's approximately eight-month delay in notifying Travelers of the underlying incident, in opposition to Travelers' motion, the insured raised a triable issue of fact as to whether its delay was reasonably based on a good-faith belief of nonliability, one of the judicially recognized excuses to late notice.  The appellate court's decision reads like a law digest compilation of seminal principles and case law citations on the issue of late notice to a liability insurer and who has to establish what in demonstrating such a coverage defense.

The appellate court also noted that because that policy in question was issued before January 17, 2009, Travelers could disclaim coverage when the insured failed to satisfy the notice condition, without regard to whether Travelers was prejudiced by the insured's failure to satisfy such condition.  

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