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"A Good Faith Belief in Non Liability" Requires Investigation

In Freeway Co., LLC v. Technology Ins. Co., 2016 NY Slip Op 03245, the First Department reaffirmed that insured landlords cannot bury their proverbial heads in the sand after an accident occurs by failing to inquire into the reasons surrounding the accident and the injuries suffered and later, after suit is filed, rely upon a "good faith belief in non-liability" as an excuse for their failure to timely notify their insurer of the accident.

The facts from the trial court decision revealed that the superintendent of the building actually witnessed the accident, was aware that a subcontractor's employee had been injured while working at the building and even told the building owner about the accident, yet it neither investigated to determine the severity of the injuries or the reason for the fall, instead assuming that worker's compensation was the injured worker's recourse. In yet another pre-prejudice case, the First Department found that such assumption "demonstrates that [the insured] unreasonably failed to keep itself informed of potential claims for damages arising from the incident" and thus, upheld the insurer's denial of coverage based on late notice.

The notice received by the insurer was less than two years post-accident, and was received via a default judgment which was later vacated at the request of the insured. Such vacatur might well have resulted in a different decision under the new prejudice rules. .