In a recent blog I discussed how a Second Circuit Court of Appeals case, Fabrozzi v. Lexington Insurance Company,1 interpreted the law regarding “Late Notice” expansively in favor of policyholders. A recent New York State Court of Appeals ruling has failed to continue this expansion and has left the law as it was regarding a carrier’s duty to deny a claim based on late notice.
In Keyspan Gas East Corporation v. Munich Reinsurance America, Inc.,2 the New York Court of Appeals ruled against the plaintiff, Keyspan, by refusing to expand the reach of a New York law that requires liability insurers to promptly disclaim coverage on the basis of late notice in cases involving accidental death and bodily injury. The plaintiff sought to expand the law to include additional claims including those involving property damage and pollution cleanup.
Had the court found in the plaintiff’s favor, it would have dramatically altered the claims handling process in New York. It would have given policyholders an opportunity to collect additional insurance proceeds by creating a stricter standard on insurance disclaimers on a much broader range of claims.
By requiring that insurers deny coverage on the basis of a late notice of claim as soon as reasonably possible, policyholders would have been able to challenge insurer disclaimers as untimely if they were not promptly issued.
While the decision does not make things worse for policyholders, it doesn’t make them better. A ruling in favor of the plaintiff would arguably have made the insurance law in New York somewhat more favorable to policyholders by creating stricter standards for insurers. Policyholders would have been given an additional and much needed method by which to collect on legitimate claims due them by their insurance carriers.
In spite of this, there are still several common law remedies by which policyholders can fight late notice denials. If you or someone you know has had a claim denied on the basis of late notice it is important that you speak to a professional about your potential options.
1 Fabozzi v. Lexington Ins. Co., 601 F. 3d 88 (2d Cir. Apr. 6, 2010).
2 Keyspan East Gas Corp.v. Munich Reinsurance America, Inc., 2014 NY Slip Op 04113, 2014 WL 2573382 (N.Y. Ct. App. June 10, 2014).