Zappone v. Home Insurance

Sweeney and Casey, JJ.,

dissent and vote to affirm in the following memorandum by Casey, J. Casey, J. (dissenting). The majority, after recognizing that the wording of subdivision 8 of section 167 of the Insurance Law is “clear and unequivocal”, with “no exclusion or exception” (Preisch v Continental Cas. Co., 55 AD2d 117, 121, mot for lv to app den 41 NY2d 802), nevertheless construes the statute’s unconditional requirement that an insurer notify its insured of its denial of coverage as inapplicable where the policy affords no coverage. Notably, there is no citation of authority for this novel statutory construction, and in our view, had the Legislature intended such a result it would not have used the phrase “deny coverage” in the statute. It is undisputed that the liability policies in question were delivered or issued for delivery in this State by defendant Home, that plaintiffs Judith and Dominick Zappone were the named insured on those policies, and that *663the policies were in effect on the date of the accident. Accordingly, there existed the contractual relationship of insurer and insured required by the statute. It is also undisputed that the named insureds gave notice to defendant Home, seeking coverage for bodily injury arising out of a motor vehicle accident occurring within this State, and that defendant Home sought to deny coverage on the ground that the automobile involved in the accident was not covered by the policies. Under such circumstances, the clear and unequivocal language of the statute requires notice of the denial of coverage as soon as is reasonably possible. “The statute lays down an unconditional rule” (Allstate Ins. Co. v Gross, 27 NY2d 263, 270) and it contains no exception dependent upon the basis for the denial of coverage, as the majority concludes. The notice requirement of subdivision 8 of section 167 does not apply where coverage is terminated due to cancellation of the policy long before the happening of the accident (Perez v Hartford Acc. & Ind. Co., 31 AD2d 895, 896) or where the insured took "some action that effectively terminated the policy prior to the accident (State Farm Mut. Auto. Ins. Co. v Elgot, 48 AD2d 362, 364). However, that is not the situation here; rather, defendant Home argues that an insurer need not give notice of its denial of coverage whenever the policy does not provide coverage. This sophistic argument is contrary to existing case law, as well as the plain language of the statute. The courts have consistently held the notice requirement applicable despite the existence of provisions that clearly operated to preclude coverage in the first instance. Thus, for example, notice has been required where an insurer denies coverage pursuant to subdivision 3 of section 167 of the Insurance Law, which provides that a liability policy does not cover injuries to the insured’s spouse unless the policy expressly so provides (see Security Ins. Group v Priestly, 61 AD2d 795; see, also, Foremost Ins. Co. v Sotiriou, 66 AD2d 812). The notice requirement has also been applied where the denial of coverage was based upon an insurer’s assertion that “the accident was not a covered occurrence” within the meaning of the policy (Regional Tr. Serv. v Kemper Ins. Cos., 73 AD2d 1036), and where the insurer sought to avoid coverage based upon a provision in the policy that precluded coverage for nonowned vehicles used in a business (Newman v Ketani, 54 AJD2d 926). Here, the defendant Home simply asserts that the vehicle involved in the accident did not meet the definition of an owned or nonowned vehicle contained in the policy. There is no basis for distinguishing this case from those cited above.* Defendant Home’s argument that requiring a liability insurer to give reasonably prompt notice of its denial of coverage where the policy plainly provides no coverage somehow places an intolerable burden on the insurer has a hollow ring. The insurer drafts the policy and is clearly in the best position to determine whether there is coverage under that policy. Where the policy plainly provides no coverage, it is a simple matter for the insurer to promptly so inform its insured. Its burden under such circumstances is clearly less than where coverage is questionable, requiring the insurer to investigate. As noted by the trial court, the statute requiring a liability insurer to give its insured and the injured parties reasonably *664prompt notice of its disclaimer of liability or denial of coverage (Insurance Law, § 167, subd 8) contains no exception where the insurance policy plainly provides no coverage, and there is no basis in case law or logic for construing the statute as containing such an exception. The 15-month delay by defendant Home in giving the required notice is unreasonable (Hartford Ins. Co. v County of Nassau, 46 NY2d 1028; Preisch v Continental Cas. Co., supra), and the judgment should, therefore, be affirmed.

While the provisions of the policy in Newman could be characterized as an exclusion, the provisions in the other cases were, like the definition of owned and non-owned vehicle herein, delineations of the scope of coverage afforded by the policy. In any event, the effect of these cases was to create coverage by virtue of the insurer’s failure to comply with subdivision 8 of section 167 of the Insurance Law where none existed in the first instance, and dissatisfaction with such a result appears to be at the heart of the majority’s decision.