Key Takeaway
New York appeals court rules that no-fault statutory prejudgment interest continues to accrue during litigation delays unless the plaintiff unreasonably caused the delay.
No-Fault Interest Continues During Litigation Delays Unless Plaintiff Causes Unreasonable Delay
No-fault insurance cases often involve lengthy litigation periods, raising important questions about when statutory prejudgment interest should accrue. Under New York’s no-fault law, injured parties are entitled to interest on overdue benefits, but there are specific rules governing when this interest can be tolled or suspended during court proceedings.
The calculation of no-fault statutory interest can significantly impact the total amount owed to healthcare providers and injured parties. In cases where litigation extends for years, the interest component may even exceed the underlying principal amount. Understanding when interest continues to run versus when it may be suspended is crucial for both plaintiffs and insurance companies.
Jason Tenenbaum’s Analysis:
Eagle Surgical Supply, Inc. v Country-Wide Ins. Co., 2018 NY Slip Op 50157(U)(App. Term 2d Dept, 2018)
“The Civil Court denied defendant’s requests, and a judgment was entered on May 21, 2015 awarding plaintiff the principal sum of $1,131.68 and, among other things, no-fault statutory prejudgment interest from January 8, 2007. As limited by its brief, defendant appeals from so much of the judgment as awarded plaintiff no-fault statutory prejudgment interest from January 8, 2007.
No-fault statutory prejudgment interest (see Insurance Law § 5106 ) begins to accrue when the action is commenced (see 11 NYCRR 65-3.9 ), “unless the applicant unreasonably delays the … court proceeding” (11 NYCRR 65-3.9 ). While a significant amount of time elapsed between the commencement of this action and the trial, defendant did not adequately demonstrate to the Civil Court, and there was nothing in the record to indicate, the reason for the protracted delay or that it was plaintiff which had “unreasonably delay” the action”
Key Takeaway
The burden falls on insurance companies to prove that a plaintiff unreasonably delayed litigation proceedings in order to suspend no-fault statutory interest. Even when significant time passes between case commencement and trial, interest continues to accrue unless the defendant can demonstrate the plaintiff caused unreasonable delays. Courts will not toll interest based on speculation or general assertions about lengthy proceedings.
Legal Update (February 2026): Since this 2018 post, New York’s no-fault interest provisions under Insurance Law § 5106 and implementing regulations at 11 NYCRR 65-3 may have been subject to amendments affecting calculation methods, tolling provisions, or procedural requirements. Additionally, subsequent appellate decisions may have further clarified when interest continues during litigation delays versus when plaintiff-caused delays justify suspension. Practitioners should verify current statutory language and recent case law developments when advising on no-fault interest calculations and tolling scenarios.
