Unigard Security Ins. Co. v. North River Ins. Co.

Issue Discussed: Notice

Submitted by Lawrence S. Greengrass, Ann E. Halden*

Date Promulgated: May 5, 1992


Unigard Security Ins. Co. v. North River Ins. Co
., 79 N.Y.2d 576 (N.Y. 1992)

Court: Court of Appeals of New York

Issues Decided: Whether a reinsurer must prove prejudice before it can successfully invoke a late notice defense.

 

Key Holding

A declaratory judgment action was commenced by Unigard in the United States District Court for the Southern District of New York.  The District Court ruled in favor of the reinsured.  On appeal, the United States Court of Appeals for the Second Circuit certified the following question to the New York State Court of Appeals “Must a reinsurer prove prejudice before it can successfully invoke the defense of late notice by the reinsured.”  The New York State Court of Appeals considered the issue and held that, absent an express provision in the contract making prompt notice a condition precedent, the reinsurer must prove that it was prejudiced by the untimely notice, and further cannot rely on any presumption of prejudice.

 

Key Takeaways

Under New York law, the reinsurer must show it was prejudiced by the late notice of the reinsurance claim in order to assert late notice as a defense to a reinsurance claim.

 

* Lawrence S. Greengrass is Senior Counsel and Ann E. Halden is Special Counsel at Mound Cotton Wollan and Greengrass LLP, where they specialize in reinsurance litigation and arbitration.