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Bovis Lend Lease LMB12/15/2005
d in an action for damages for injury, loss or damage remains unsatisfied after 30 days from service of the notice of entry on the insured's attorney, or the insured, and the insurer, an action may be maintained against the insurer (subd ). " he Legislature, recognizing that an injured party, while not privy to the insurance contract, had a genuine interest in it and should be enabled to invoke its protection, enacted [the forerunner of § 3420] to create . . . an independent right of the injured person to proceed directly against the liability insurer" (Lauritano v American Fid. Fire Ins. Co., 3 AD2d 564, 567 , affd 4 NY2d 1028 ).
The language requiring the insurer to give written notice of disclaimer of liability or denial of coverage "as soon as is reasonably possible" "leave no doubt that [the Legislature] intended to expedite the disclaimer process, thus enabling a policyholder to pursue other avenues expeditiously" (First Fin. Ins. Co., 1 NY3d at 68). The Legislature's Budget Report on the bill that ultimately became § 3420(d) (Governor's Bill Jacket, L 1975, ch 775) also evinces the Legislature's intent that § 3420(d) not be applied to insurers. The Report stated that " he purpose of the bill is to assist a consumer or claimant in obtaining an expeditious resolution to liability claims by requiring insurance companies to give prompt notification when a claim is being denied." It continued:
"This bill would prevent insurance companies from deliberately engaging in dilatory practices which inhibit the fair and expeditious resolution of liability claims. By expediting the disclaimer or denial process, the consumer is able to pursue, at an earlier point in time, an alternative method of recovering liability damages."
Approval was recommended on the ground that " t is in the interests of protecting the consumer to prevent undue delay in the adjudication of cases involving liability insurance coverage, particularly where settlement fees are necessary to pay medical and legal expenses."
It is clear that the notice requirement of § 3420(d) is designed to protect the insured and the injured person or other claimant against the risk, posed by a delay in learning the insurer's position, of expending energy and resources in an ultimately futile attempt to recover damages from an insurer or forgoing alternative methods for recovering damages until it is too late to pursue them successfully (see Allstate Ins. Co. v Gross, 27 NY2d 263, 267 ; Aetna Cas. & Sur. Co. v Dimino, 40 AD2d 1076 ; Appell v Liberty Mut. Ins. Co., 22 AD2d 906, 907 , affd 17 NY2d 519 ).
Recognizing that these are not risks to which another insurer seeking contribution is subject, courts have held that § 3420(d) is not applicable to a request for contribution between coinsurers (see Tops Mkts. v Maryland Cas., 267 AD2d 999, 1000 [4th Dept 1999]; accord AIU Ins. Co. v Investors Ins. Co., 17 AD3d 259, 260 [1st Dept 2005]). In AIU, this Court found that "AIU received notice of the accident, conducted an investigation, undertook the defense of the lawsuit and managed the defense on its own for four years. Manifestly, it has not been prejudiced by any late disclaimer by Investors."
The fact that National Union seeks from Royal not contribution but the full defense and indemnity of Bovis and Columbia in the underlying personal injury action does not alter the analysis. National Union's ability to defend and/or indemnify Bovis and Columbia is not affected by a delay in learning of Royal's position. Indeed, National Union apparently has been providing the defense of the underlying action for nearly three years. Whether it seeks contribution or full coverage, National Union is
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