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When Disclaiming Coverage, Publish or Perish (NY)

August 2, 2019

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<p style="text-align: justify;">Coverage analysis can be complicated. Conducting the necessary research and evaluation of all potential variables is often difficult and complicated. But a recent Second Department ruling in <em><a href="">AVR-Powell-C-Dev.-Corp.-v-Utica-First-Ins.-Co</a>.</em> serves as a stark reminder that even after an insurer is satisfied a loss or claim is not covered, the analysis does not end there.</p>
<p style="text-align: justify;">In <span style="text-decoration: underline;">AVR-Powell</span>, the plaintiffs were additional insureds seeking a declaratory judgment for defense and indemnification from the defendant insurer. Utica First had issued a policy to its named insured, a subcontractor on a construction project, and plaintiff qualified as an additional insured pursuant to the policy language and plaintiff’s contract with the named insured.</p>
<p style="text-align: justify;">In 2008, when one of the named insured’s employees was injured on the job, a co-insurer tendered a claim for indemnification on behalf of the plaintiffs to Utica First, and did so again when the injured employee filed suit in 2009. Utica First promptly served a disclaimer to the named insured in 2008, and then to the co-insurer in 2009.</p>
<p style="text-align: justify;">The underlying personal injury matter eventually went to trial in 2015 at which point plaintiffs raised Insurance Law §3402(d), requiring prompt disclaimer, to seek defense and indemnification. They argued that because Utica First had failed to publish their disclaimers directly to the additional insureds, and because the disclaimers relied solely on an exclusion, Utica First had lost its opportunity to disclaim coverage as to plaintiffs. The Second Department agreed, affirming summary judgment in favor of plaintiffs, requiring Utica First to assume defense, indemnity and past defense costs for plaintiffs.</p>
<p style="text-align: justify;">It is a reminder in New York to publish disclaimers to <em>any</em> and <em>all</em> claimants—not just the entity tendering coverage—promptly to avoid a costly error.</p>
<p style="text-align: justify;">Thanks to Nicholas Schaefer for his contribution to this post. Please email <a href="">Vito A. Pinto</a> with any questions.</p>


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