Recent amendments to Insurance Law § 3420 prohibits an insurer from disclaiming coverage on late notice grounds where it has not suffered any prejudice as a result of the belated notice. However, the statute expressly exempts from the prejudice requirement claims-made policies, which it states may still “provide that the claim shall be made during the policy period, any renewal thereof, or any extended reporting period….”
The third issue addressed by the OGC was whether the new prejudice requirement promulgated under Insurance Law § 3420 also apply to claims-made policies. The OGC answered this query in the affirmative, stating that Insurance Law § 3420 applies to occurrence as well as claims-made policies, but that the statute “recognizes the distinctive nature of claims-made policies and does not allow for duplicate claims under multiple policy periods, or a late claim under a prior policy period.” In that regard, the OGC noted that Insurance Law § 3420(a)(5) “provides that a claims-made policy may provide that the claim shall be made during the policy period governing the time during which the event occurred; the renewal of such policy; and any extended reporting period under such policy.” (Citing Circular Letter No. 26 (2008), which we previously discussed here.