There is No Need To Be Alarmed By Alarmist Readings of New York’s Most Recent Ruling On Waiver of Notice Defenses

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The New York Court of Appeals recently reversed and remanded a lower court’s ruling that insurers had waived their late notice defense by not raising the defense until years after they first received notice of a pollution remediation claim. Although some have interpreted this decision as a near-death knell to coverage for pollution remediation claims with potential notice issues in New York, the situation is not nearly that dire.

In KeySpan Gas East Corp. v. Munich Reinsurance America, Inc., 2014 WL 2573382, 2015 N.Y. Slip Op. 04113 (N.Y. June 10, 2014), an assignee of the policyholder was seeking a declaration that several insurers were obligated to cover the remediation of environmental damage at sites formerly owned and operated by the policyholder. When the policyholder initially notified its insurers that there potentially would be regulatory investigations of the sites, the insurers issued standard reservations of rights letters, but did not deny coverage based on allegedly late notice. In fact, the insurers did not affirmatively assert that notice had been untimely until the policyholder brought its declaratory judgment action nearly three years later.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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