Much has been written – in this space and elsewhere – about the rules and practicalities governing warnings / denials of insurance coverage under the Warnings Act, Insurance Act §3420 (d) (2) (formerly §3420 (d)). The situation most often discussed is the common situation in which the notice of the accident and / or the claim is given to the insurer by the insured or the injured party, and the discharge of liability is, in accordance with the terms of the law, issued by the insurer “to the insured and to the injured party or to any other claimant”. (Ins. L. §3420 (d) (2) provides as follows: “If, under a liability policy issued or issued in that State, an insurer disclaims all liability or refuses coverage in the event of death or bodily injury resulting from a motor vehicle accident or any other type of accident occurring in such condition, he must give written notice as soon as is reasonably possible of such exclusion of liability or denial of coverage to the insured and the injured person or any other claimant. ”) In some cases, however, notice of the claim is given to the insurer by another insurance company, rather than by the insured or the injured person. Whether the same considerations and obligations apply in this situation has occupied many courts in several different contexts.
It is well established that “the Legislature enacted Section 3420 (d) (2)” to assist aggrieved parties “by encouraging the prompt resolution of liability claims. [citations omitted]. ” KeySpan Gas East v. Munich Reins. A m., 23 NY3d 583 (2014). As previously stated by the First Department in Bovis Lend Lease LMB v. Royal Surplus Lines Ins. Co., 27 AD3d 84 (1st Dep’t 2005), “The purpose of §3420 (d) is to ‘protect the insured, the injured party and any other interested party who has a real interest in the outcome, from being injured by a late denial of coverage ‘ [citation omitted] …. It is clear that the notice requirement of §3420 (d) is designed to protect the insured, and the injured party or other claimant from the risk, posed by a delay in learning the position of the insurer, to spend energy and resources with an ultimately futile purpose attempt to recover damages from an insurer or forgo other methods of recovery of damages until it is too late to pursue them successfully [citation omitted]. “27 AD3d at 91, 92.