Key Takeaway
Court rules State Farm's 15-day delay in sending disclaimer letters after completing investigation was unreasonable, resulting in waived coverage defenses.
Matter of Matter of AIU Ins. Co. v Veras, 2012 NY Slip Op 03116 (1st Dept. 2012)
“On June 4, 2005, respondent Veras and additional respondent Richard, who was driving a vehicle owned by additional respondent Wynder-Ortiz and insured by State Farm, were involved in an automobile accident. State Farm was not notified and did not learn of the accident from its insured. Nearly four years later, it learned of the accident from Veras, who served it with the judgment entered in his favor in the action he had commenced against Richard and Wynder-Ortiz. Although it completed its internal investigation and prepared letters of disclaimer within two weeks, State Farm waited another 15 days before sending out the letters. It was not error for the court to find this largely unexplained delay unreasonable (see Insurance Law § 3420; First Fin. Ins. Co. v Jetco Contr. Corp., 1 NY3d 64, 66 ; Travelers Ins. Co. v Volmar Constr. Co., 300 AD2d 40, 42-43 ; see also George Campbell Painting v National Union Fire Ins. Co. of Pittsburgh, PA, 92 AD3d 104 ).”
So, notice of the accident is received after 4 years. A judgment is entered and served upon State Farm. Then, a decision is made to deny within 2 weeks. Then 15 days were not explained. After this, a disclaimer was sent, and this was insufficient?
“We reject State Farm’s argument that the delay was due to its investigation of other possible grounds for disclaiming. State Farm’s witness testified that the investigation was completed in two weeks. In any event, however, “just as we would not permit the insured to delay giving the insurer notice of claim while investigating other possible sources of coverage, [*2]we should not permit the insurer to delay issuing a disclaimer on a known ground while investigating other possible grounds for avoiding liability” (George Campbell Painting, 92 AD3d at 115).”
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- Understanding coverage defenses when insurers fail to timely disclaim
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- How courts handle second chances for procedural mistakes
- New York No-Fault Insurance Law
Legal Update (February 2026): Since this 2012 decision, Insurance Law § 3420 disclaimer requirements and the standards for “reasonable time” determinations may have been subject to regulatory amendments or evolving case law interpretations. Practitioners should verify current provisions regarding notice timelines, investigation periods, and waiver standards, as courts may have refined the analysis of what constitutes reasonable delay in disclaimer situations.
