Statutes and case law make it tough for insurance companies to disclaim coverage. In most jurisdictions, if an insurance company receives a claim or tender it must respond quickly and with specificity to avoid losing the right to assert an exclusion or other basis to deny coverage. Where the notice of claim comes in from a policyholder, the insurance company–if it chooses to disclaim coverage–simply notifies the policyholder in a timely manner of the basis for the disclaimer. Things get a bit more complicated when there are multiple additional insureds and the claim arises out of a construction project. To whom is the disclaimer owed?
In a recent case, a New York intermediate appellate court, addressed the consequences of not giving notice of a disclaimer to additional insureds.