Recent Insurance Coverage Decision in Appellate Division, First Department Raises Some Eyebrows

One thing of which I'm sure: Justice Catterson does not agree with New York's no-prejudice rule.  The no-prejudice rule is a limited exception that allows a primary insurer to deny coverage when the insured has not provided a timely notice of claim or occurrence, provided the insured has not established a valid excuse.  The insurer does not show that it has been prejudiced by the late notice to disclaim coverage.

The Appellate Division, First Department, struggled as to whether the no-prejudice rule should still exist in New York in Great Canal Realty Corp. v. Seneca Ins. Co. -- a plurality decision.  Justice Catterson weighed in with analysis against continuing the rule in New York.  He also wrote this decision earlier this year about his view of the no-prejudice rule when he sat as a Supreme Court Justice.

As previously mentioned, the New York Court of Appeals will hear oral arguments on the no-prejudice rule in February 2005 (see prior post).