Coverage Disclaimer May Not Await Investigation of Other Defenses

New York Insurance Law ' 3420(d) requires certain liability insurers to provide written notice of disclaimer of a personal injury claim “as soon as is reasonably possible.” In a 2004 ruling, the New York Supreme Court, Appellate Division, First Department held that, notwithstanding the statutory language of ' 3420, an insurer was “not required to disclaim on timeliness grounds before conducting a prompt, reasonable investigation into other possible grounds for disclaimer.” DiGuglielmo v. Travelers Prop. Cas. Co., 776 N.Y.S.2d 542, 544 (1st Dep't 2004). In a Jan. 17, 2012 decision, the First Department revisited ' 3420 and expressly overruled DiGuglielmo, reasoning that its previous holding was inconsistent with the statutory language, New York Court of Appeals precedent, and public policy considerations. In George Campbell Painting v. National Union Fire Ins. Co. of Pittsburgh, PA, 2012 N.Y. App. Div. LEXIS 249 (Decided Jan. 17, 2012), the unanimous court held that “' 3420(d) precludes an insurer from delaying issuance of a disclaimer on a ground that the insurer knows to be valid ' here, late notice of the claim ' while investigating other possible grounds for disclaiming.” In Campbell, the court ruled that because the insurer had sufficient knowledge of a late notice defense nearly four months before it provided a written disclaimer to the insured, the disclaimer was ineffective as a matter of law.