July 23, 2008
Governor Paterson signed a bill (Senate Bill.8610 and Assembly Bill 11541 (the “Bill” into law on July 23, 2008 that reverses New York’s late notice rule. The Bill amends New York Insurance Law §3420 and curtails an insurer’s ability to deny a claim based upon “late notice” unless the insurer can show that it was prejudiced by the untimely notice. This law will become effective January 19, 2009 and will apply to insurance policies issued, renewed or modified on and/or after January 19, 2009.
The critical aspects of the new law are that: (1) An insurance carrier cannot disclaim coverage based on untimely notice unless it proves that the untimely notice materially prejudiced its ability to investigate and/or timely defend the claim; (2) If the insured provides the insurer with notice of a claim within two years of the time required by the insurance policy the insurer bears the burden of proving prejudice. If the insured provides the insurer with notice later than two year of the time required by the insurance policy then the insured bears the burden of proving the absence of prejudice to the insurer; (3) Plaintiffs in underlying personal injury actions are permitted to commence pre-judgment declaratory actions solely involving the question of late notice and only if the insurer and/or insured fails to commence a declaratory judgment action within 60 days of the insurer’s disclaimer based upon late notice; (4) A plaintiff in a personal injury claim can seek insurance coverage information from an insurer before commencing a lawsuit when primary liability insurance policies covering bodily injury or death claims and/or statutorily required insurance policies are involved.
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