34-Day Delay In Disclaiming Deemed Unreasonable As A Matter Of Law

In Sirius America Insurance Company et al v. Vigo Construction Corp., Martin Gonzalez and East Wind Contracting, Inc., 2008 NY Slip Op 01134, AD Index 2006-07895, Queens Co. Index 3209/05, the trial court denied all motions, including the cross motion for summary judgment by Martin Gonzalez seeking a declaration that Sirius American Insurance Company was required to defend and indemnify Vigo Construction Corp., in the underlying action, Martin Gonzalez v. Vigo Contruction Corp., as well as the motion by Sirius, seeking a declaration it was not obligated to defend and indemnify Vigo in the underlying matter.

In reversing the lower court, the Appellate Division – Second Department, cited Insurance Law §3420 which requires an insurer to provide a written disclaimer “as soon as is reasonably possible.” The Appellate Division further held that any written disclaimer is measured from the time when the insurer has sufficient knowledge of facts entitling it to disclaim, or know that it will disclaim. Here, the Court found Sirius sent a disclaimer 34 days after it knew or should have known the basis for denying coverage. Apparently without explanation for this delay by Sirius, the Appellate Division found the 34-day delay to be unreasonable as a matter of law.