INSURANCE LAW ú UNDERINSURANCE
ú REASONABLE NOTICE
Reasonable notice of an
underinsurance claim to an insurance provider depends on whether the insured
gave notice reasonably promptly after the insured knew or reasonably should
have known that the tortfeasor had insufficient coverage.
[SUMMARY] | [ISSUE
& DISPOSITION] | [AUTHORITIES CITED] | [COMMENTARY]
The Court combined two appeals involving disputes over notice of claim provisions
for underinsured motorist coverage. Underinsurance coverage is designed to increase
the level of protection afforded to policyholders injured by negligent drivers
who lack adequate liability insurance. The policy from the Nationwide Insurance
Company ("Nationwide") required notice of claims for underinsurance benefits
to be filed "as soon as practicable". The Metropolitan Property and Casualty
Company policy ("Metropolitan") required written notice "within 90 days or as
soon as practicable." The Metropolitan policy did not specify the starting point
of the ninety-day countdown.
DiGioacchino's claim arose out of a December 1994 accident. The Plaintiff filed
his claim for first party (no fault) benefits immediately after the accident
with Nationwide, who was the insurer for both motorists. However, the Plaintiff
filed the claim for underinsurance only after learning on October 23, 1996,
during settlement talks, that the tortfeasor had a $25,000 policy limit. When
Nationwide refused to pay, citing untimely notice, the appellant served Nationwide
with a demand for arbitration. Nationwide responded by bringing a proceeding
in supreme court for a permanent stay of arbitration. The Supreme Court granted
the stay and the Appellate Division subsequently affirmed.
Mancuso's claim originated from a May 1993 accident. Mancuso also immediately
filed a claim with the insurer, Metropolitan, for first party (no fault) benefits.
However, Mancuso only learned of the tortfeasor's insufficient coverage on May
30, 1996, eight months after commencement of a personal injury. The Plaintiff
then filed a notice of claim for underinsurance with Metropolitan six days after
learning this fact. Metropolitan also denied coverage because of the untimely
notice. The Plaintiff served the insurer with a demand for arbitration. Metropolitan,
in response, brought a proceeding in Supreme Court for a permanent stay. The
Supreme Court granted the stay for Metropolitan and the Appellate Division subsequently
ISSUE & DISPOSITION
Whether the insured may be denied coverage where
the policy for underinsurance provides for notice to be given "as soon as practicable"
or "within 90 days or as soon as practicable" and the insured gave notice after
the insured learned that the tortfeasor was underinsured.
Yes. Underinsurance coverage may be denied
since the notice of the claim period is calculated from the date the claimant
knew, or reasonably should have known, that the tortfeasor was underinsured.
Cases Cited by the Court
- S'Dao v. National
Grange Mut. Ins. Co., 87 N.Y.2d 853 (N.Y. 1995).
- In re Prudential
Property & Cas. Co. v. Szeli, 83 N.Y.2d 681 (N.Y. 1994).
- White v. City
of New York, 81 N.Y.2d 955 (N.Y. 1993).
- Mighty Midgets, Inc. v. Centennial Ins. Co., 47 N.Y.2d 12 (N.Y. 1979).
- Security Mut. Ins. Co. of N.Y. v. Acker-Fitzsimmons Corp., 31 N.Y.2d 436
- Deso v. London & Lancashire Indem. Co. of Am., 3 N.Y.2d 127 (N.Y. 1957).
- Matan v. Nationwide Mut. Ins. Co., 243 A.D.2d 978 (N.Y. App. Div. 1997).
- In re Allstate Ins. Co. v. Sala, 226 A.D.2d 172 (N.Y. App. Div. 1996).
- In re Arbitration between Travelers Ins. Co. v. Dauria, 224 A.D.2d 259
(N.Y. App. Div. 1996).
- In re Travelers Ins. Co. v. Morzello, 221 A.D.2d 291 (N.Y. App. Div. 1995).
Other Sources Cited by the Court
- N.Y. I. Law
- N.Y. Comp Codes R & Regs. tit 11 § 60-2.0 to § 60-2.4 (1998).
- Melinda R. Ledden, Note, Uninsured Motorist Coverage in Virginia: The Scope
of Protection and the New Underinsurance Provisions, 69 Va. L. Rev. 355 (1983).
- Ralph P. Higgins Note, Uninsured Motorist Coverage Laws: The Problem of
the Uninsured Motorist, 55 Notre Dame L. Rev. 541 (1980).
- 9 Lee E. Russ and Thomas F. Segalla, Couch on Insurance §122:3, §22:14,
126:25-31 (3d ed. 1999).
- Samuel Williston, Williston on Contracts §900 (Walter H.E. Jaegar, ed.,
- Memorandum of State Executive Dept., McKinney's Session Laws 2445-2446
- 8 John Alan Appleman & Jean Appleman, Ins. Law and Practice §4734 (1981).
- Duzich v. Marine Office of America Corp., 980 S.W.2d 857 (Tex. Ct. App.
- Lighter v. Lumbermen's Mut. Cas. Ins. Co., 683 N.E.2d 297 (Mass. App. Ct.
- Nationwide Mut. Ins. Co. v. State Farm Mut. Ins. Co., 470 S.E.2d 556 (N.C.
Ct. App. 1996).
- Sutton v. Littlepage, 669 N.E.2d 1019 (Ind. Ct. App. 1996).
- Atlanta Int'l. Ins. Co. v. Checker Taxi Co. Inc., 574 N.E.2d 22 (Ill. App.
- Pacific Employers Ins. Co. v. Superior Court of Los Angeles County, 221
Cal. App. 3d 1348 (Cal. Ct. App. 1990).
- Jeff Berman, '00
- Matt Hanley, '01
- Kimmone Ottley, '01
- Angela Rea, '01
- Kirsten Stolte, '01
- Anna Zhuravitsky, ‚01