Court Holds That Insurer Owes No Coverage For A Dog Bite Claim After The Insured Failed To Provide Timely Notice Of Its Claim Pursuant To The Policy's Terms And Conditions
July, 2011
The Appellate Division, Second Department recently determined that an insurer owes no coverage for a dog bite claim because the insured failed to provide timely notice of its claim, pursuant to the policy's terms and conditions. Zimmerman v. Peerless Ins. Co., 2011 WL 2506954 (N.Y.A.D. 2 Dep't 2011).
On October 31, 2006, Arthur Angst (the "Claimant") was allegedly bitten by Erwin Zimmerman's (the "Insured") dog. Zimmerman, 2011 WL 2506954 at *1. During a brief verbal confrontation after the dog bite occurred, the Insured saw blood on the Claimant's hand and offered to pay the Claimant's medical expenses, but the Claimant declined. Id. Within Forty-Eight (48) hours of the incident, the Suffolk County Department of Health was informed of the incident, requested the dog's vaccination records and informed the Insured that because this was the second incident wherein the Insured's dog bit someone, the dog would be restricted to the Insured's property. Id.
Peerless Insurance Company ("Peerless") issued a policy to the Insured that contained a requirement that the Insured provide notice of an accident or occurrence "as soon as practicable." Id. On May 8, 2007, six months after the dog bite occurred, the Insured was served with a Summons and Complaint from the Claimant. The next day, for the first time, the Insured notified Peerless of the incident. Id.
On May 11, 2007, Peerless disclaimed coverage on the grounds that the Insured did not comply with the notice provisions of the policy. Id. at *2. Thereafter, the Insured commenced a declaratory judgment action seeking a declaration that Peerless wrongfully denied coverage, and was required to defend and indemnify the Insured in the underlying action. Id. Following discovery, both Peerless and the Insured moved for Summary Judgment. Id. The lower court denied both Peerless and the Insured's Motions for Summary Judgment, and both parties appealed. Id.
On appeal, the Insured argued that his delay in notifying Peerless was reasonable because he did not know the Claimant's identity and he did not believe that he would be liable for the Claimant's injury. Under New York law, generally, the existence of a good faith belief that an injured party will not seek to hold an insured liable and the reasonableness of such belief are questions of fact, but summary judgment may be awarded to the insurer if, construing all inferences in favor of the insured, the evidence establishes as a matter of law that the insured's belief in nonliability was unreasonable or in bad faith. See Ponok Realty Corp. v. United Natl. Specialty Ins. Co., 69 A.D.3d 596 (2d Dep't 2010); Bigman Bros., Inc. v. QBE Ins. Corp., 73 A.D.3d 1110 (2d Dep't 2010).
The Court found that the Insured's failure to notify Peerless for six months was not based on a reasonable or good faith belief in non-liability, because the Insured knew immediately that his dog bit the Claimant and that the Claimant was injured by the bite. Further, the Insured knew within 48 hours that a complaint had been made about the incident and the Insured knew of at least one substantiated incident involving his dog prior to the incident with the Claimant.
After construing all inferences in favor of the Insured, the Court found that the Insured failed to raise a triable issue of fact. Accordingly, the Court reversed the lower court's finding as to late notice and determined that the Insured did not give timely notice under the policy. As such, the Court held that Peerless was not obligated to defend or indemnify the Insured in the underlying action.
Learning Point
In this case, the Insured's policy was issued before January 17, 2009, and prior to January 17, 2009, an insurer could disclaim coverage without regard to prejudice when the insured failed to satisfy a notice condition. However, Insurance Law § 3420 was amended to impose upon insurance companies the obligation to demonstrate prejudice as a condition to denying coverage based on late notice of a claim. The amendment applies to liability insurance policies which provide coverage for personal injury or property damage issued or delivered in New York on or after January 17, 2009.
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