04/27/23 National Interstate Insurance Co. v. Interstate Insurance Co. Appellate Division, First Department

Issue of Fact Whether Notice Provided by Additional Insured as Soon as Reasonably Proper Under the Circumstances

National Interstate insured New York Crane under a liability insurance policy. National Interstate and Crane sought a declaration from the Court that Crane was entitled to defense and indemnification in an underlying personal injury action as an additional insured on a policy issued by Interstate to Broadway Concrete. Interstate disclaimed coverage on the ground that Crane did not provide timely notice – a tried and try argument from years past.  Usually late notice denials are black and white and a solid ground for denying coverage.  Not this time.

The First Department concluded that there was an issue of fact as to whether notice was provided as soon as practicable under the circumstances. The delay in providing notice by Crane was lengthy, but the record raised issues of fact as to when National Interstate and Crane should have known that Interstate was Broadway Concrete's insurance carrier by digging deep and practicing diligent.  The record further raised issues of fact on whether Crane gave notice to Interstate as soon as reasonably proper and within a reasonable time under the circumstances. The First Department rejected Interstate's argument that plaintiffs, who possessed a certificate of insurance listing a previous policy issued by Interstate to Broadway Concrete, had sufficient information prior to April 2014 to identify Interstate as Broadway Concrete's liability insurer or that plaintiffs otherwise failed to act diligently in providing notice.

The court also rejected Interstate's argument that the wrap up exclusion applied to bar coverage. While the protections of Insurance Law § 3420(d) may be inapplicable to an insurer's claim for reimbursement against another insurer, plaintiffs demonstrated that defendant failed to give timely written notice of its disclaimer, based on the wrap-up exclusion, to Crane.