Drastic Insurance Disclosure Rules Take Aim at New York Lawsuit Defendants

Even with some softening amendments taking effect February 24, 2022, New York’s 2021 Comprehensive Insurance Disclosure Act brings sweeping and burdensome new insurance disclosure demands for persons and companies named in lawsuits in New York state courts. Here’s what New York defendants and their insurers need to know.

The New Law and the New Requirements

  • Time of Insurance Disclosure
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Not later than 90 days after answering a complaint, the defendant must provide to the plaintiff “proof of the existence and contents of any insurance agreement” in the form of the insurance policy in place at the time of the loss.

But if the plaintiff agrees in writing, the defendant need only produce a copy of a declaration page. A plaintiff who agrees to accept a declaration page in lieu of the policy may later revoke that agreement and shall then be provided a full copy of the insurance policy.

  • Policies to be Disclosed

The insurance information and documentation provided, whether in the form of the policy or the declaration page, shall include “all primary, excess and umbrella policies, contracts or agreements, and self-insurance programs insofar as such documents relate to the claim being litigated.” [emphasis ours].

  • Additional Disclosures

The insurance disclosure must also provide the following:

a. The name and email address of an assigned individual responsible for adjusting the claim at issue; and

b. The total limits available under any policy, after taking into account erosion and any other offsets.

  • Reasonable Efforts

Defendant must make reasonable efforts to update the information given to any party, at the time of filing of the note of issue [the pleading that places the case on the trial calendar], when entering into any court settlement conference or voluntary mediation, at the time the case is called for trial, and for 60 days after entry of final judgment in the case, including all appeals.

  • Affidavits of Defendant and Defense Counsel

Unfortunately, one challenging provision in the original bill was not amended. Newly added Section 3122-b of the Civil Practice Law and Rules mandates that any insurance information provided must be accompanied by both an affidavit of the defendant [emphasis ours] and an affidavit or affirmation of the defendant’s attorney –

stating that the information is accurate and complete, and that “reasonable efforts” have

been undertaken to ensure that this information remains accurate and complete.

Under this provision defendants in New York lawsuits will need to appoint an individual with knowledge of the defendant’s insurance program to be able to execute such an affidavit. More problematic is the statute’s requirement that defense counsel also provide similar affidavits or affirmations, ignoring the fact that defense counsel learn about the insurance coverage from their clients, and not from personal knowledge.

  • Some Improvements Over the Original Bill

The amendments did provide some improvements. The time to serve insurance disclosure was extended from 60 to 90 days after the answer is filed. It is now clearly stated that disclosure of an insurance policy does not render it admissible in evidence at trial. Also clear is that such disclosure does not constitute an admission that an alleged injury is covered by the policy, obviously more helpful to the insurer than the insured defendant.

The original law required that these detailed insurance disclosures be made in all pending cases, not just in new lawsuits. The amendments remove the requirement from already pending lawsuits.

Going Forward

Navigating these new requirements will be challenging, and questions will abound. How far into excess coverage layers must defendants provide insurance disclosure? Why should layers of excess coverage have to be disclosed if they far exceed the value of the claim? Should defendants produce only declarations pages in the first instance? What if the affidavit of accuracy and completeness are not provided? Or, what if it turns out that the coverage disclosed is inaccurate?

These and many other issues, both legal and operational, will be faced under the new law. We would be pleased to discuss these new requirements and assist you to work through them.