The Office of General Counsel issued the following opinion on July 17, 2003, representing the position of the New York State Insurance Department.
Re: Notification of Contractual Limitations Period to Commence Suit.
Question Presented:
Pursuant to New York Law, is an insurers failure to notify a claimant of the contractual limitations period to commence suit when the insurer denies a claim sufficient to estop the insurer from relying on the limitations period in the policy?
Conclusion:
No. Pursuant to N.Y. Comp. Codes R. & Regs. tit. 11, § 216.6(c)(1995) (Regulation 64), in any case where a claim is rejected, the insurer is required to notify the claimant, or the claimants authorized representative, in writing, of any applicable policy provision limiting the claimants right to sue the insurer. However, a New York court has held that an insurers failure to comply with Section 216.6(c) of Regulation 64 when the insurer denied the claim, without more, was not sufficient to estop the insurer from relying upon the limitations period in the policy.
Facts:
Mr. A states that his client sustained property losses and that the commercial casualty policy contains a contractual limitations period of one year from the inception of the loss. He further states that in California, an insurer who denies a claim is required to notify the insured of the contractual limitations period, per a regulation adopted by the Insurance Commissioner, and applied in California cases. Otherwise, the insurer is estopped from relying on this defense in a subsequent lawsuit brought by the insured. Mr. A would like to know what New York Law provides in regard to this matter.
Analysis:
N.Y. Comp. Codes R. & Regs. tit. 11, § 216.6 (1995) (Regulation 64) sets forth the standards for fair, prompt and equitable settlements. Section 216.6(c) provides that "[i]n any case where the claim is rejected, the insurer shall notify the claimant, or claimants authorized representative, in writing, of any applicable policy provision limiting the claimants right to sue the insurer."
However, in May v. Aetna Life & Cas. Co., 204 A.D.2d 1007 (4th Dept. 1994), the Court (citing Blitman Constr. Corp. v. Insurance Co. of North America, 66 N.Y.2d 820 (1985), held that absent facts giving rise to an estoppel, the insurer was not obligated to call the plaintiffs attention to the policy provision pertaining to the limitations period. The Court further stated that the insurers failure to comply with Section 216.6(c) of Regulation 64 when the insurer denied the claim, without more, was not sufficient to estop the insurer from relying on the limitations period in the policy.
For further information you may contact Senior Attorney Pascale Joasil at the New York City Office.