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Bovis Lend Lease LMB12/15/2005
tender for same is hereby rejected."
Meanwhile, on April 9, 2003, plaintiffs - i.e., National Union and the insureds Bovis and Columbia - had instituted this action for a judgment declaring that Royal was obligated under the policy to fully insure, defend and indemnify Bovis and Columbia in the still-pending personal injury action and to reimburse National Union for its attorneys' fees, costs, disbursements and other expenses incurred in the defense of that action. On August 22, 2003, Royal moved for a judgment declaring that it had no duty to defend or indemnify Bovis or Columbia, based on the above-cited policy exclusion, and for summary judgment dismissing the complaint. Plaintiffs contended in opposition that Royal's disclaimer of liability was untimely under Insurance Law § 3420(d) as a matter of law and therefore ineffective. In reply, Royal argued that § 3420(d) is not available to an insurer to be asserted against another insurer, that, in any event, its disclaimer was timely under the circumstances, and that it had provided a reasonable excuse for any delay. The motion court denied Royal's motion, finding that § 3420(d) applied to notice given by one insurer to another, and that the notice here given by Royal was untimely as a matter of law, thereby precluding consideration of the merits of the exclusion involved.
While we agree with the ultimate result reached by the motion court, we reject the court's holding that Insurance Law § 3420(d) applies to notice given by one insurer to another.
Insurance Law § 3420(d) provides:
"If under a liability policy delivered or issued for delivery in this state, an insurer shall disclaim liability or deny coverage for death or bodily injury arising out of a motor vehicle accident or any other type of accident occurring within this state, it shall give written notice as soon as is reasonably possible of such disclaimer of liability or denial of coverage to the insured and the injured person or any other claimant."
The statute clearly mandates that an insurer must as soon as is reasonably possible give written notice of disclaimer of liability or denial of coverage for death or bodily injury under a liability policy to "the insured . . . ." Thus, the threshold issue here with respect to the insureds Bovis and Columbia is whether Royal's undated written disclaimer notice was given as soon as reasonably possible. It is uncontroverted that such notice was received on May 21, 2003. In most cases, the timeliness of an insurer's notice of disclaimer "will be a question of fact, dependent on all of the circumstances of a case that make it reasonable, or unreasonable, for an insurer to investigate coverage" (First Fin. Ins. Co. v Jetco Contr. Corp., 1 NY3d 64, 70 ). However, where the basis for the disclaimer was or should have been readily apparent before the onset of the delay, any explanation by the insurer for its delay will be insufficient as a matter of law, and where the basis was not readily apparent, an unsatisfactory explanation will render the delay unreasonable as a matter of law (id. at 69).
Here, Royal received notice of the claim against third-party defendant Millennium from National Union's claim representative on March 3, 2003, and assigned the claim to Claims Specialist Christopher Corhan. On that date, Mr. Corhan acknowledged receipt of the tender, advised that he was initiating an investigation into the facts of the loss and the coverage issues presented in the claim, requested a copy of the contract between Bovis and Millennium, and advised that Royal was not accepting or rejecting the claim at that time. The notice of the claim it received on March 3 did not give Royal sufficient noti
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