In re the Arbitration between Eagle Insurance & Morel

Mar 11, 1994
Versions:202 A.D.2d 1064
609 N.Y.S.2d 128
1994 N.Y. App. Div. LEXIS 3556

—Order unanimously reversed on the law with costs and petition dismissed. Memorandum: On March 26, 1991, petitioner received notice that respondent was seeking uninsured motorist benefits. Five and a half months later, respondent demanded arbitration of his claim. By petition served September 25, 1991, petitioner commenced the instant proceeding to stay arbitration on the ground that the uninsured motorist endorsement of the policy excludes coverage of an insured who sustains injury "while operating an automobile in violation of an order of suspension.”

Supreme Court erred in granting the petition. "[A]n insurance company may not disclaim liability if it fails to give the insured timely notice of disclaimer 'as soon as is reasonably possible after it first learns of the accident or grounds for disclaimer of liability’ (Hartford Ins. Co. v County of Nassau, 46 NY2d 1028, 1029; Kramer v Interboro Mut. Indem. Ins. Co., 176 AD2d 308)” (Matter of Nationwide Mut. Ins. Co. [Steiner], 199 AD2d 507). Petitioner bore the burden of establishing the reasonableness of its delay in notifying respondent of its disclaimer (see, Matter of State Farm Auto. Ins. Co. [Merrill] 192 AD2d 824; Matter of Blee v State Farm Mut. Auto. Ins. Co., 168 AD2d 615). Petitioner’s attempt to explain the delay through the affidavit of counsel, who lacked personal knowledge of the facts, is insufficient to meet that burden (see, Interboro Mut. Indem. Ins. Co. v Gatterdum, 163 AD2d 788, 789). Petitioner had all of the information it needed to investigate the status of respondent’s driver’s license when it received respondent’s claim (cf., Matter of Allcity Ins. Co. [Jimenez] 78 NY2d 1054). Absent evidence that it "acted either reasonably or diligently, or that it conducted an investigation of coverage”, petitioner’s failure to ascertain that respondent’s license was suspended does not excuse the six-month delay in disclaiming coverage (Nova Cas. Co. v Charbonneau Roofing, 185 AD2d 490, 492; Interboro Mut. Indem. Ins. Co. v Gatterdum, supra). (Appeal from Order of Supreme Court, Nassau County, Robbins, J. — Stay Arbitration.) Present — Green, J. P., Balio, Fallon, Doerr and Boehm, JJ.