In QBE v. D. Gangi Contracting Corp. the Appellate Division, First Department, addressed the all too common problem of an insured contractor failing to provide its commercial general liability insurance carrier with timely notice of the plaintiff construction worker's injury. In QBE, the insured contractor did not notify its insurance carrier of the injury until some three years after the accident. The insurance policy contained a very common requirement for the insured to notify the insurance carrier of a claim "as soon as reasonably practicable." The contractor apparently knew of the injury but claimed that it did not know of potential for a claim against it relying on a long line of New York cases that hold an insured does not need to notify an insurance carrier of a claim if it has a good faith belief in non-liability for the claim. However, here the court found that the contractor failed to establish a good faith belief in non-liability because of the strict liability nature of the labor law.
This case is only the most recent of many reminders from the courts that failure to timely notify your insurance carrier of an accident could be devastating. To protect yourself, make sure you notify your insurance carrier of any accidents on your construction site as soon as they occur. Even if you do not believe you have any liability it is better to be safe and notify the carrier. It is important to note that a significant change in the law on this topic took effect in 2009 and we may begin to see courts interpret late notice disclaimers differently in the near future. However, rather than making yourself a test case for the courts, put your insurance carrier on timely notice of the accident and you will likely not have to face the notice issue. Remember, you bought that insurance policy for a reason.
Vincent T. Pallaci is a New York construction lawyer. He can be reached at firstname.lastname@example.org