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New York’s Highest Court Finds Insurer’s Delay in Disclaiming Justified Because of Insured’s Failure to Cooperate

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The New York Court of Appeals held that an insurer who had made substantial efforts to secure an insured’s cooperation was required to disclaim only after it became clear the insured would not cooperate. Country-Wide Ins. Co. v. Preferred Trucking Services Corp, 22 N.Y.3d 571 (N.Y. 2014)

The case was governed by N.Y. Ins. Law Sec. 3420 (d)(2), which requires that in death or bodily injury cases for accidents in New York, the insurer must give written notice of disclaimer or denial “as soon as is reasonably possible.” 

The underlying claim involved a personal injury of a person who was unloading a truck owned by the defendant. The insurer made several sustained attempts to secure the cooperation of the driver of the truck, including hiring Spanish-speaking investigators to make contact with him. He gave indications he would cooperate, but ultimately made it clear he would not appear for a deposition. The insurer disclaimed less than three weeks later this failure to cooperate became clearly established. 

The Court of Appeals said that “[t]he question whether an insurer disclaimed as soon as reasonably possible is necessarily case-specific.” It accepted the insurer’s argument that as long as the insurer was still seeking the insured’s cooperation in good faith, it could not disclaim. Thus the Court held that on these facts, the insurer “had established as a matter of law that its delay was reasonable,” so the disclaimer was effective and the insurer had no duty to defend and indemnify the insured.