An appellate court in New York, reversing a trial court's decision, has ruled that a notice of disclaimer an insurer sent six days after learning about possible grounds for disclaiming coverage was timely.
The Case
Susan Beiter sued Felix Diaz for injuries she said she suffered in a motor vehicle collision with him.
At his deposition in that action, Mr. Diaz testified that he had two passengers in his vehicle at the time of the collision whom he had picked up and was transporting elsewhere, at the request of an acquaintance who ran a taxi service.
Six days later, Mr. Diaz's insurance carrier, Country-Wide Insurance Company, notified Mr. Diaz that it was disclaiming coverage of the accident pursuant to the livery-vehicle exclusion in his insurance policy.
Ms. Beiter then sent her insurer, Foremost Insurance Company, a demand for arbitration of a claim for uninsured motorist benefits.
Foremost went to court, seeking a permanent stay of arbitration. It contended that Country-Wide's disclaimer of coverage was untimely such that Mr. Diaz was effectively insured.
The trial court granted Foremost's petition for a permanent stay of arbitration, and Country-Wide appealed.
The Appellate Court's Decision
The appellate court reversed.
In its decision, the appellate court explained that, pursuant to New York Insurance Law Section 3420(d), an insurance carrier had to provide its insured and any other claimant with timely notice of its disclaimer or denial of coverage on the basis of a policy exclusion and that it was estopped from disclaiming liability or denying coverage if it failed to do so.
Here, the appellate court continued, Country-Wide first learned about the possible grounds for disclaiming coverage under the livery-vehicle exclusion when Mr. Diaz was deposed, and it sent a notice disclaiming coverage six days later.
Thus, the appellate court ruled, as a matter of law, Countrywide provided timely notice of its disclaimer.
Accordingly, the appellate court concluded, Foremost failed to demonstrate that Mr. Diaz was insured, and its petition to permanently stay arbitration of Ms. Beiter's uninsured motorist claim should have been denied.
The case is Matter of Foremost Ins. Co. v. Beiter, No. 2018-05999 (N.Y. App. Div. 2d Dep't Sep. 11, 2019). Attorneys involved include: Jaffe & Koumourdas, LLP, New York, NY (Jean H. Kang of counsel), for respondent-appellant. Buratti Rothenberg & Burns, East Meadow, NY (Mitchell E. Pak of counsel), for petitioner-respondent.
Steven A. Meyerowitz
Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. He may be contacted at [email protected].