Relates to notice of disclaimer of liability for certain revived causes of action; such notice shall occur within 120 days after the insurer has received actual notice of such revived claim or cause of action.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A7418
SPONSOR: Pretlow TITLE OF BILL:
An act to amend the insurance law, in relation to notice of disclaimer
of liability for certain revived causes of action
PURPOSE OR GENERAL IDEA OF BILL:
To clarify the timing within which insurers must notify purported policy
holders of an intent to deny or disclaim coverage for unique, and poten-
tially decades old, claims, that have been revived pursuant to the Civil
Practice Law and Rules.
SUMMARY OF PROVISIONS:
Section 1 amends Insurance Law 3420 to clarify when an insured must
provide notice of an intent to disclaim coverage of claims raised as a
result of actions revived pursuant to section 214-g of the civil prac-
tice law and rules.
Section 2 provides the effective date.
JUSTIFICATION:
New York Insurance Law requires that for an insurer to deny coverage for
a death or bodily injury claim, the insurer must give written notice of
the disclaimer to the insured and the injured person "as soon as reason-
ably possible." N.Y. Ins. Law § 3420(d) (2). Courts have similarly
concluded that "once the insurer has sufficient knowledge of facts enti-
tling it to disclaim, or knows that it will disclaim coverage, it must
notify the policyholder in writing as, soon as is reasonably possible."
First Financial Ins. Co. v. Jetco Contracting Corp., 1 N.Y.3d 64, 66
(2003); Montpelier U.S. Ins. Co. v. 240 Mt. Hope Realty Co., 2015 U.S.
Dist. LEXIS 143820, *5 (S.D.N.Y. Oct. 22, 2015). Case law further
requires that the timeliness of the disclaimer be measured from the
point in time when the insurer first learns of the grounds for-disclaim-
er, and "an insurer's explanation is insufficient as a matter of law
where the basis for denying coverage was or should have been readily
apparent before the onset of the delay." First Financial, 1 N.Y. 3d at
68-69.
In 2019, the CPLR was amended to revive certain claims and causes of
action asserted against public and private entities and institutions
arising out of childhood sexual abuse, which may result-in those enti-
ties and institutions seeking coverage under insurance programs stretch-
ing back decades. Many entities will be seeking coverage under purported
insurance policies for indemnification against claims arising out of the
new provisions of the CPLR. Existing Insurance Law is clear that it is
the insured's burden of proving the existence, terms and conditions' of
the policy or policies. See, Pacific Employers Ins. Co. v. Troy Belting
& Supply Co., No. 1:11-CV-912, 2016 U.S. Dist. LEXIS 134224, at *40-.41
(NDNY 2016); see, also, Bianchi v. Florists Mut. Ins. Co., 660 F. Supp.
2d 434, 436 (EDNY 2009). Due to the historic nature of these revived
claims and the age of alleged policies to cover such claims, insureds
may not have retained copies and supporting records, and may have little
or no evidence of existence, terms and conditions. Insurers, too, may be
unable to locate any evidence at all, or locate only incomplete copies,
without all policy terms and conditions, within the first month after
receiving notice.
This legislation clarifies that insurers must make diligent efforts to
locate alleged policies when notified of claims thereunder. The bill
also clarifies, however, that the time in which an insurer must notify
an insured of an intention to disclaim or deny coverage for a claim
brought pursuant to the CPLR reviver, will not begin to run until the
insurer has actual knowledge of the existence of a policy - either'
because one has been presented by the insured, or one has been located
by the insurer - or, after reasonably diligent efforts by both the
insured and the insurer, neither is able to locate a copy or sufficient
evidence of existence, terms and conditions. This clarification is
consistent with public policy and fairness, that insureds and insurers
should be given as much time as they need, within the bounds of reason-
ableness, to research and identify insurance policies that potentially
apply to a revived claim or cause of action, particularly ones that may
be nearly seventy years old.
PRIOR LEGISLATIVE HISTORY:
2023-2024 A3615 referred to insurance
2022 01/05/22 A2286 referred to insurance
2019-2020 A8298A referred to insurance
None
EFFECTIVE DATE:
This act shall take effect immediately and be deemed to be in full force
and effect on the same date and in the same manner as section 3 of chap-
ter 11 of the laws of 2019, and shall apply to all policies entered into
on or before such date.
STATE OF NEW YORK
________________________________________________________________________
7418
2025-2026 Regular Sessions
IN ASSEMBLY
March 25, 2025
___________
Introduced by M. of A. PRETLOW -- read once and referred to the Commit-
tee on Insurance
AN ACT to amend the insurance law, in relation to notice of disclaimer
of liability for certain revived causes of action
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Paragraph 2 of subsection (d) of section 3420 of the insur-
2 ance law, as amended by chapter 388 of the laws of 2008, is amended to
3 read as follows:
4 (2) If under a liability policy issued or delivered in this state, an
5 insurer shall disclaim liability or deny coverage for death or bodily
6 injury arising out of a motor vehicle accident or any other type of
7 accident occurring within this state, it shall give written notice as
8 soon as is reasonably possible of such disclaimer of liability or denial
9 of coverage to the insured and the injured person or any other claimant.
10 Provided, however, that with regard to any civil claim or cause of
11 action revived pursuant to section two hundred fourteen-g of the civil
12 practice law and rules, an insurer shall give written notice of a
13 disclaimer of liability or denial of insurance coverage for such revived
14 claim or cause of action to the insured within one hundred twenty days
15 after the insurer has received actual notice of such revived civil claim
16 or cause of action.
17 § 2. This act shall take effect immediately and shall apply to all
18 policies entered into on or before such date.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD09484-01-5
