New York is notoriously strict in requiring insurers to promptly disclaim coverage. In Lloyd's v. Gray, the insurer delayed 56 days in disclaiming on an apparently air tight exclusion based on bodily injury to any employee of an independent contractor engaged by the insured. The insurer received notice of the suit, engaged an investigator to interview the insured, and disclaimed coverage in a 56 day period. The Appellate Division, First Department held that whether the insurer disclaimed "as soon as is reasonable possible" was a fact question that precluded summary judgment in favor of the insurer.
A life's lesson for insurers underwriting risks in New York: disclaim promptly and cite all potential grounds that preclude coverage.