In a nutshell, the no-prejudice rule in New York provides that an insurer does not have to demonstrate prejudice where the insurer receives late notice of claim or occurrence concerning its insured and may disclaim based on that late notice where no reasonable excuse for the delay by the insured is given. As New York Civil Law has reported, the New York no-prejudice rule has been whittled down in the past couple of years (see posts here and here).
I've been curious to see how trial courts and Appellate Division are applying the holdings in Argo Corp. v. Greater New York Mut. Ins. Co. and Rekemeyer v. State Farm Mut. Auto. Ins. Co. The decision in Amer. Trans. Ins. Co. v. B.O. Astra Mgmt. Corp. is a recent example.
In this case out of the New York County Supreme Court, the victim was injured in an automobile accident by American Transit Ins. Co.'s insureds. The insureds did not inform American Transit about the accident or the victim's lawsuit that he instituted several months after the accident. The victim immediately notified American Transit about the accident, providing a written notice of the accident and claim. That written notice made clear that the victim retained an attorney and that potential claims against American Transit's insured existed. On the same date as the letter, the victim's attorney sent American Transit a letter and an application for no-fault benefits.
American Transit claimed that it did not learn of the suit that the victim had commenced until it received a copy of the victim's motion for default judgment against the insureds. American Transit (1) sent notification to its insureds that it was disclaiming coverage for the failure to provide timely notice of the commencement of the underlying victim's action, and (2) subsequently commenced a declaratory judgment action seeking a declaration that it did not have a duty to defend or indemnify the insureds.
The trial court rejected American Transit's argument that the victim failed to satisfy the notice of lawsuit requirement because it first learned of the underlying lawsuit when the victim served it with a copy of his default motion. The Court reasoned that the rationale of Matter of Brandon (Nationwide Mut. Ins. Co.) applied, even though this case did not involve supplementary underinsurance motorist coverage. The Court noted that American Transit was not only given timely notice of the claim (citing Brandon) but it was also informed that the victim had retained counsel.
The decision does a nice job of applying the no-prejudice case law and is, indeed, worth a read.
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