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The Importance of a Comprehensive Disclaimer in NY

March 9, 2009

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In 2002, Plaintiff Estee Lauder presented environmental claims to One Beacon Insurance Group under an insurance policy running from 1968-1971.
Unable to locate sufficient evidence that such a policy ever existed, One Beacon rejected the claims, indicating it was terminating its investigation and closing its file.
Apparently, it did not cite any other potential ground for disclaimer. Thereafter, further evidence of the existence of the policy surfaced and One Beacon attempted to assert a late notice defense.
But the First Department held One Beacon waived its right to assert such a defense, as One Beacon was aware of the facts supporting that potential defense but failed to cite it in its 2002 letters to plaintiff.
While the Court recognized that a late disclaimer will not create coverage where the existence of coverage cannot be established, that did not excuse an insurer's duty to timely assert all known defenses to a claim.
The Court also held that a blanket reservation of rights allowing for a future disclaimer was insufficient, and that One Beacon's 2002 letters denying the claim served as disclaimers, despite the fact that the term "disclaimer" was not used.
This decision serves as an important reminder that an insurer should always cite all applicable coverage defenses, even in cases where it is seems obvious that no coverage exists.
Thanks to Stephanie Chen for her contribution.
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