Over at CoverageCounsel, Roy Mura gives a good description of the coming changes to both the CPLR (§ 3001) and the Insurance Law (§ 3420; § 2601(a)) in his post, End of an Era — The Last Hours of New York’s No Prejudice Rule:

What changes are those, you ask? Essentially there are three:

1. Direct DJ Actions Allowed: Personal injury or wrongful death plaintiffs may commence and maintain declaratory judgment actions directly against liability insurers that have disclaimed liability or denied coverage based on late notice. Such DJ actions are limited to the question of late notice, and a plaintiff no longer will need to obtain a money judgment against the insured in order to maintain such a DJ action to challenge the insurer’s late notice disclaimer.
2. Prejudice Required: The failure to give any required notice within the time period that a policy prescribes will not invalidate any liability coverage claim made by any insured, injured person or any other claimant, unless the failure to provide timely notice has prejudiced the insurer. In DJ litigation over a late notice disclaimer, “the insurer’s rights shall not be deemed prejudiced unless the failure to timely provide notice materially impairs the ability of the insurer to investigate or defend the claim.” Prejudice will be presumed “if, prior to notice, the insured’s liability has been determined by a court of competent jurisdiction or by binding arbitration; or if the insured has resolved the claim or suit by settlement or other compromise.” If the notice was provided within two years of the loss or occurrence, the burden will be on the insurer to prove that is was prejudiced; if the notice was delayed by more than two years, the burden will be on the insured, injured person or other claimant to prove the insurer was not prejudiced.
3. Disclosure of Liability Coverage & Limits Required: Upon written request, auto and personal liability (homeowners, renters, etc.) insurers will have 60 days to: (1) confirm the existence of liability coverage in effect on the date of the alleged occurrence; and (2) disclose the liability coverage limits of such policies. This new requirement does not apply to excess liability or umbrella policies, whether personal or commercial lines in nature. It also ostensibly does not apply to commercial liability policies, unless they are “used to satisfy a financial responsibility requirement imposed by law of regulation.”

Is a similar “prejudice” rule for no-fault coming. Should there be one?

For more information on the recent amendments, read the rest of Roy’s post and check out my post from Nov 15 on theCPLRblog.

One last thing, § 2601(a) of the Insurance Law was changed (Yes, this was also in Roy’s post),.I’m reposting that part of Roy’s post, putting the changes in bold.

INSURANCE LAW § 2601(a)

§ 2601. Unfair claim settlement practices; penalties.

(a) No insurer doing business in this state shall engage in unfair claim settlement practices. Any of the following acts by an insurer, if committed without just cause and performed with such frequency as to indicate a general business practice, shall constitute unfair claim settlement practices:

(1) knowingly misrepresenting to claimants pertinent facts or policy provisions relating to coverages at issue;

(2) failing to acknowledge with reasonable promptness pertinent communications as to claims arising under its policies;

(3) failing to adopt and implement reasonable standards for the prompt investigation of claims arising under its policies;

(4) not attempting in good faith to effectuate prompt, fair and equitable settlements of claims submitted in which liability has become reasonably clear, except where there is a reasonable basis supported by specific information available for review by the department that the claimant has caused the loss to occur by arson. After receiving a properly executed proof of loss, the insurer shall advise the claimant of acceptance or denial of the claim within thirty working days;

(5) compelling policyholders to institute suits to recover amounts due under its policies by offering substantially less than the amounts ultimately recovered in suits brought by them; or

(6) failing to promptly disclose coverage pursuant to subdivision (d) or subparagraph (A) of paragraph two of subsection (f) of section three thousand four hundred twenty of this chapter.