Under New York Insurance Law §3420(d)(2), an insurance company that denies liability coverage for death or bodily injury “shall give written notice as soon as reasonably possible of such disclaimer or liability or denial of coverage to the insured and the injured person or any other claimant.” The satisfaction of this requirement demands more than just a simple, cursory letter.

As exhibited by recent New York appellate court decisions, courts scrutinize both the timing and the actual substance of an insurance company’s notice of disclaimer. When the insurance company knows (or should know) the basis for a denial, they must articulate those grounds with a high degree of specificity. If they fail to identify defenses with a high degree of specificity, courts will find those coverage defenses waived.

New York courts interpret this requirement against the backdrop that injured parties should receive timely notice of an insurance company’s denial.

The Court of Appeals, in KeySpan Gas E. Corp. v. Munich Reinsurance Am., Inc., explained that §3420(d)(2) was enacted to “aid injured parties” by encouraging the expeditious resolution of liability claims. The statute “establishe[s] an absolute rule that unduly delayed disclaimer of liability or denial of coverage violates the rights of the insured [or] the injured party.”

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