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New NY Insurance Disclosure Obligations Effective December 31, 2021 (NY)
July 6, 2017
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<p style="text-align: justify;">On December 31, 2021, New York State Governor signed into law a new act implementing much more rigorous insurance disclosure obligations than previously existed. While defendants in New York have always been required to disclose applicable insurance policies and coverage limits, defense attorneys had some flexibility as to the timing of such disclosures. Unless plaintiffs attorneys pressed the issue, it was often not necessary to disclose the full insurance policy as long as the policy information and limits were disclosed, or possibly provided along with the declarations page only (redacted as to the insured’s premiums).</p>
<p style="text-align: justify;">The newly-signed <strong><a href="https://legislation.nysenate.gov/pdf/bills/2021/s7052">Comprehensive Insurance Disclosure Act</a></strong> modifies the insurance disclosure rules contained within CPLR §3101(f) by compelling strict and rigorous disclosure of the complete primary, excess, and umbrella policies implicated by a claim. The below changes will require swift action from defense counsel as well as carriers to obtain and disclose information regarding all currently-pending claims and all new claims moving forward within 60 days of the law taking effect:</p>
<p style="text-align: justify;">1. Defendants will be required to provide plaintiffs with complete information for any insurance agreement through which a judgment could be satisfied within 60 days after serving an answer. This requirement extends to a complete copy of all applicable policies, including declarations, insuring agreements, conditions, exclusions, endorsements, and any other documents bearing upon coverage, including applications for insurance.</p>
<p style="text-align: justify;">2. Defendants must disclose any other lawsuits that have already reduced or eroded, or could potentially reduce or erode, any policy limits, including the amount of attorneys fees that have eroded or reduced the face value of the policy, along with contact information for the attorney who received such legal fees.</p>
<p style="text-align: justify;">3. Defendants must disclose the contact information of the claims adjusters, including the telephone number and email address. This includes third-party administrators and people within the insuring entity to whom the third-party administrator must report.</p>
<p style="text-align: justify;">4. Additionally, the newly-added section, CPLR §3122-b, requires that all insurance disclosures made pursuant to CPLR §3101(f) must be certified by both the party themselves and the attorney to ensure that the information disclosed is accurate and complete. This would require an affirmation or an affidavit.</p>
<p style="text-align: justify;">The new disclosure obligations of CPLR §§ 3101(f) and 3122-b are effective throughout the life of an action, and defendants are directed to provide updated information within 30 days of receiving any information that would render the prior disclosure inaccurate or incomplete. The disclosures as detailed above are to be completed by March 1, 2022 for all currently pending actions, and within 60 days of service of an answer for all future new actions.</p>
<p style="text-align: justify;">Although there is already an amended version of the Comprehensive Insurance Disclosure Act in the works, if adopted the amended bill would likely leave in place the rigorous certification requirements. The amended version would relax some requirements, by lengthening the notification period from 60 days to 90 days, and eliminating the requirements to share insurance applications (which often contain an applicant’s private personal financial information) and related lawsuits.</p>
<p style="text-align: justify;">It is unclear at this time what type of penalties might be enacted for failure to disclose, and how rigorously the courts will enforce these new requirements. However, unless and until the new Comprehensive Insurance Disclosure Act is amended, all defense counsel and claims adjusters must take action to review their case loads and comply by the operative disclosure deadlines. At this time, we recommend that all carriers promptly review the following list of “action items” and cooperate with defense counsel in preparing to timely make the required disclosures by the March 1, 2022 deadline:</p>
<p style="text-align: justify;">• At the inception of a case, identify all policies at issue, procure copies of all policies at issue, and identify any lawsuits that have reduced or eroded the policies.
• Disclose the above information to defense counsel.
• Continuously monitor the policies at issue and immediately report any changes to defense counsel.
• Provide name, telephone number, and e-mail address for claims adjusters (including TPAs).
• Provide up-to-date contact information throughout litigation for insured.
• Put the insured on notice that they will be required to prepare a certification in cooperation with defense counsel, and also advise that their insurance application will be turned over to plaintiff’s counsel.</p>
<p style="text-align: justify;">Thanks to Shira Straus for her contribution to this post. Please contact <a href="mailto:Haquino@wcmlaw.com">Heather Aquino</a> with any questions.</p>