In our last column,1 we noted how busy the Court of Appeals was on Feb. 18 of this year dealing with a series of significant insurance law issues. Limited by space restrictions and noting the existence of several articles that had already been written about K2 Investment Group v. American Guarantee & Liability Ins.(K2-II), 22 NY3d 578 (Feb. 18, 2014), we elected to write about Country-Wide Ins. v. Preferred Trucking Services, 22 NY3d 571 (Feb. 18, 2014), and to reserve to another day a discussion of QBE Insurance Corp. v. Jinx-Proof, 22 NY3d 1105 (Feb. 18, 2014), which deals with “reservation of rights” letters. This is that day.
One of the most well-established principles of New York Insurance Law is that reservation of rights letters get little respect in this state. The New York courts have consistently held that a letter in which an insurer simply reserves its rights to deny or disclaim coverage, but does not unequivocally deny or disclaim, “has no relevance to the question whether the insurer has timely sent a notice of disclaimer of liability or denial of coverage,” and, thus, whether certain defenses to coverage have been waived. Hartford Ins. v. County of Nassau, 46 NY2d 1028 (1979). See also, Strauss Painting v. Mt. Hawley Ins. 105 AD3d 512 (1st Dept. 2013) (letters intended to preserve carrier’s right to disclaim were insufficient to actually disclaim coverage); Long Island Lighting v. Allianz Underwriters Ins., 104 AD3d 581 (1st Dept. 2013) (reservation of rights letter, which specifically reserved defense of late notice and sought additional information, did not preclude finding of waiver due to failure to timely issue a disclaimer); Penn Millers Ins. v. C.W. Cold Storage, 103 AD3d 1132 (4th Dept. 2013) (reservation of rights letter allowed insured to ‘preserve its defense under the policy until the facts supporting disclaimer became clear,’ but did not permit it “to unreasonably delay the exercise of those rights to the detriment of [the insured]“).
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