In the words of Chaucer: “For bet than never is late,” [Better late than never]. It is a phrase insurers in New York should avoid at all costs in providing notices of disclaimer of coverage to their insureds.1 Under New York Insurance Law §3420(d), an insurer disclaiming coverage liability or denying coverage for death or bodily injury arising out of an accident must provide written notice as soon as is reasonably possible of such disclaimer of coverage to the insured and injured person or any other claimant.2 New York courts have held that an insurer’s failure to provide notice of disclaimer as soon as is reasonably possible after first learning of the accident (or of grounds for disclaimer of liability or denial of coverage) precludes the insurer from disclaiming coverage, even where the insured’s own notice of the incident or claim is untimely.3 What is less clear is what exactly constitutes “as soon as is reasonably possible.”
The determination of whether the disclaimer was issued as soon as reasonably possible first begins by referencing the time when the insurer first acquired knowledge of the ground(s) upon which it disclaimed. The reasonableness of any delay is computed from the time the insurer becomes sufficiently aware of the facts supporting a disclaimer.4 Most often, the question of whether a notice of disclaimer has been sent as soon as reasonably possible will be a question of fact, dependent on all of the circumstances of a case that make it reasonable, or unreasonable, for an insurer to investigate coverage.5 However, where the basis for the disclaimer was, or should have been, readily apparent before the onset of the delay, any explanation by the insurer for its delay will be insufficient as a matter of law (underscoring the importance of avoiding Chaucer’s sarcasm above).6 Additionally, where delays are unexplained, or unexcused, by the insurer, New York courts have held that waiting periods of approximately two months or longer were unreasonable as a matter of law.7
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