Wait Five Months To Report A Claim, Lose Insurance Coverage

In Avery & Avery v. American Insurance Company, plaintiff, a commercial tenant, sought a judgment declaring the defendant insurance company had an obligation to defend and indemnify it in the underlying personal injury action, Verrone v. Maryard Realty, Inc. In the underlying case, on March 2, 2004, Mr. Verrone, a client of plaintiff’s subtenant, fell on a staircase in the presence of plaintiff. Subsequently, plaintiff learned that Mr. Verrone died. Plaintiff also knew Mr. Verrone’s nephew came to the premises to take photographs of the accident location and that the decedent’s family was “exploring the possibility of a claim.” On July 2, 2004, the attorney for the Verrone’s Estate contacted the out-of-possesion landowner. On August 10, 2004 plaintiff’s insurance broker forwarded a notice of claim to defendant. After a brief investigation, on September 10, 2004, defendant disclaimed coverage on the ground that it did not receive timely notice of the claim.

Motions for summary judgment by both parties were denied by the trial court. In reversing and granting defendant summary judgment, the Appellate Division, Second Department found that the insurance policy at issue required that notice of a claim be given as soon as practicable. While plaintiff asserted that it had a reasonable belief in nonliability, given the facts herein, the defendant established as a matter of law that the plaintiff did not have a reasonable belief that no claim would be asserted against it.