No policy, no coverage

Understanding the Foundation of No-Fault Insurance Claims

No-fault insurance cases in New York hinge on a fundamental principle: there must be valid insurance coverage in effect at the time of the accident. Without an active policy, even the most compelling claim for personal injury protection benefits will fail. This basic requirement often becomes the battleground in litigation when insurance companies assert that no coverage existed.

The recent TAM Med. Supply Corp. v Hereford Ins. Co. decision illustrates how courts evaluate insurance companies’ defenses based on the absence of coverage. When an insurer claims no policy was in effect, they must provide sufficient proof to establish this defense prima facie. The quality and detail of this evidence can make or break the case, as courts require more than mere assertions—they demand concrete documentation and proper foundation.

This evidentiary standard protects both parties: it prevents frivolous denials while ensuring that insurance coverage disputes are resolved based on factual records rather than speculation. Understanding how courts evaluate these coverage defenses is crucial for anyone involved in New York’s no-fault insurance system.

The burden of proving the existence of insurance coverage initially falls on the plaintiff in no-fault litigation. However, once the plaintiff establishes a prima facie case by showing that they submitted claims to the insurer, the burden shifts to the defendant insurance company to prove its affirmative defenses. Lack of coverage represents one of the most fundamental defenses available to insurers—if no policy existed covering the date of loss, the insurer has no obligation to pay regardless of the legitimacy of the claimed injuries or treatments.

New York courts have developed clear standards for what constitutes sufficient proof of non-coverage. Insurance companies cannot simply assert that no policy existed; they must provide affidavit testimony from individuals with knowledge of their records, describing the search methodology employed and the negative results obtained. The detail and specificity of these affidavits often determines whether the defense succeeds or fails on summary judgment.

Case Background

In TAM Medical Supply Corp. v Hereford Insurance Co., the plaintiff healthcare provider sought no-fault benefits for medical supplies provided to an injured patient. TAM submitted claims to Hereford Insurance Company based on information indicating that Hereford insured the vehicle involved in the accident. Hereford denied the claims, asserting that it had no policy covering the vehicle on the date of the accident.

The case proceeded to summary judgment, with Hereford moving to dismiss the complaint based on lack of coverage. In support of its motion, Hereford submitted affidavits from three of its employees. These employees described conducting comprehensive searches of Hereford’s insurance records and confirmed that no policy existed covering the subject vehicle on the accident date.

TAM opposed the motion, arguing that Hereford’s proof was insufficient to establish the absence of coverage. The plaintiff contended that the employee affidavits lacked adequate foundation and detail to meet the insurer’s burden of proof. The Appellate Term was required to evaluate whether Hereford’s submissions satisfied the legal standard for proving non-coverage as an affirmative defense.

Jason Tenenbaum’s Analysis:

TAM Med. Supply Corp. v Hereford Ins. Co., 2018 NY Slip Op 51779(U)(App. Term 2d Dept. 2018)

“In support of its cross motion, defendant submitted affidavits by three employees who described the details of record searches they had performed and stated that their searches had revealed that there was no relevant Hereford Insurance Company policy in effect on the date of the accident in question. We find that defendant’s affidavits were sufficient to demonstrate, prima facie, that plaintiff’s claim did not arise out of a covered incident”

Legal Significance

The Appellate Term’s decision provides important guidance on the evidentiary requirements for proving lack of coverage in no-fault cases. The court’s analysis focused on the quality and detail of the affidavits submitted by Hereford Insurance Company, finding them sufficient to establish the absence of coverage prima facie.

What made these affidavits adequate? The court emphasized that the three employees “described the details of record searches they had performed.” This language indicates that mere conclusory statements would have been insufficient—the affiants needed to explain their search methodology, the records they consulted, and the scope of their investigation. By providing this detail, Hereford demonstrated that its assertion of non-coverage was based on a thorough, systematic review of its records rather than casual or superficial inquiry.

The decision also illustrates the practical application of burden-shifting in no-fault summary judgment practice. Once the plaintiff establishes that claims were submitted to the insurer, the defendant bears the burden of proving its affirmative defenses. Lack of coverage represents a complete defense—if proven, it defeats the plaintiff’s claim entirely regardless of the medical necessity of treatments or the legitimacy of charges. However, insurers must meet their burden with specificity and foundation.

This case stands in contrast to situations where insurers submit generic affidavits or affidavits from individuals lacking sufficient knowledge of the company’s records. Courts regularly reject such submissions as inadequate to establish prima facie proof. The key distinction is whether the affiant demonstrates actual familiarity with the records search process and can attest to the comprehensiveness of the investigation performed.

Practical Implications

For insurance companies defending no-fault claims on lack of coverage grounds, this decision underscores the importance of detailed affidavit testimony. Generic statements that “no policy exists” will not suffice. Instead, insurers should ensure that their affidavits include: (1) identification of the affiant’s role and access to company records; (2) description of the specific databases or filing systems searched; (3) explanation of the search parameters and methodology employed; (4) confirmation that the search was comprehensive; and (5) clear statement of the negative results obtained.

The use of three separate employee affidavits in this case, while potentially not necessary, demonstrates a belt-and-suspenders approach that left no doubt about the thoroughness of Hereford’s records search. Insurers may consider whether multiple affidavits from different personnel searching different systems provides additional credibility and reduces the risk of factual disputes.

For healthcare providers and their attorneys challenging lack of coverage defenses, careful scrutiny of the insurer’s proof remains essential. Providers should examine whether the affidavits truly describe a detailed search methodology or merely contain conclusory assertions. Questions to consider include: Does the affiant have actual knowledge of the company’s record-keeping systems? Is there evidence that all relevant databases were searched? Could additional policies or records exist that were not examined? If the affidavits are vague or conclusory, they may not establish prima facie proof.

Additionally, providers should investigate whether the vehicle owner obtained coverage from another carrier for the accident date. If alternative coverage exists, this may explain the negative search results while not necessarily defeating the claim—it simply means the wrong insurer was billed. Providers may need to redirect claims to the correct carrier when lack of coverage defenses are substantiated.

Key Takeaway

This decision demonstrates that insurance companies can successfully defend no-fault claims by providing detailed affidavits from employees who conducted thorough record searches. The court found that three employee affidavits describing their search methodology and negative results were sufficient to establish prima facie that no coverage existed. This approach mirrors successful insurance defenses we’ve seen in cases like Chubb defense substantiated and unrebutted, where proper documentation proved decisive.

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