In Elacqua v. Physicians’ Reciprocal Insurers the Appellate Division, Third Department held that a carrier’s failure to affirmatively advise an insured that, when the existence of both covered and uncovered claims creates a conflict of interest between the carrier and insured the insured is entitled to obtain independent counsel at the carrier’s expense, is a deceptive practice under General Business Law 349. The same court ruled in 2005 that a carrier has the affirmative duty to advise the insured of its right to independent counsel, a decision in conflict with an earlier First Department case.

The key fact supporting the deceptive practice claim was that the carrier’s practice was not to inform an insured of its right to independent counsel, thus making the offending practice consumer-oriented, not just a private dispute with this particular insured.

http://decisions.courts.state.ny.us/ad3/decisions/2008/502964.pdf