American Home Assurance Co. v. International Insurance

Full title: AMERICAN HOME ASSURANCE COMPANY, Appellant, v. INTERNATIONAL INSURANCE…

Court: Appellate Division of the Supreme Court of New York, First Department

Date published: Apr 11, 1996

Fact:

The main issue to be resolved on this appeal is whether an excess insurance carrier must allege and demonstrate prejudice when asserting late notice of claim or occurrence as a defense against a claim by a co-excess insurance carrier suing for contribution. Although the need for carriers seeking to disclaim coverage based on late notice has been addressed in the context of primary insurance and reinsurance coverage, the question, as framed here, has yet to be squarely addressed by an appellate court in this State. Notwithstanding Federal authority to the contrary, we perceive the role of an excess-level insurance carrier as being functionally more akin to that of a reinsurer and significantly different from that of a primary insurance carrier, which typically undertakes the defense and direction of the underlying litigation against the insured. It follows, therefore, that the reasons behind the “no prejudice” exception carved out of the general rules of contract for primary insurers are inapplicable to the claim brought here by an excess insurance carrier against another excess insurance carrier. Accordingly, we reverse the IAS Court’s order granting summary judgment in the defendant’s favor and reinstate the plaintiff’s complaint.

Issue:

Issue: The main issue is whether an excess insurance carrier must allege and demonstrate prejudice when asserting late notice of claim or occurrence as a defense against a claim by a co-excess insurance carrier suing for contribution.

Decision: 

The court reversed the lower court’s decision, holding that the excess insurance carrier must demonstrate prejudice when asserting late notice as a defense. The court reinstated the plaintiff’s complaint, finding that the defendant failed to establish prejudice and therefore should not be permitted to disclaim coverage solely based on late notice.

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