This case is a nice arrow for your insurance coverage quiver. The recent Appellate Division, Second Department decision, Bailer v. Guardian Life Ins. Co. concerns the insurer's denial of the insured's claim under his disability insurance policy based on late notice of claim. The insured claimed that he became totally disabled due to mental illness.
In opposition to the insurer's summary judgment motion based on late notice of claim, the insured contended that, given the circumstances of his severe mental illness, he notified the insurer of his disability claim as soon as was reasonably possible. Supreme Court determined that the record was insufficient for it to determine whether the insured's alleged mental disability rose to a level such that it constituted a "legally acceptable mitigating circumstance" and reasonable excuse for the delay in giving notice of the claim. To resolve this factual issue, Supreme Court scheduled a framed-issue hearing to determine "(1) whether plaintiff was able to engage in rational thought and deliberate decision making sufficient to pursue his claim for coverage, and (2) whether the delay was caused by [circumstances] other than plaintiff's alleged impairment."
The Second Department held that Supreme Court's decision to schedule a framed-issue hearing was error. Once the court determined that an issue of fact existed as to whether the insured's mental illness was a legally acceptable mitigating circumstance, the court should have denied the summary judgment motion.
It's not an earth-shattering decision; however, you can put this case away for those times when a trial court attempts to schedule a framed-issue hearing where it should be denying the summary judgment motion.
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