Country-Wide Insurance Co. v. Preferred Trucking Services Corp.

Summary

The New York Court of Appeals held that Country-Wide Insurance's disclaimer of coverage based on the insureds' noncooperation was timely. Because the insurer continued making reasonable efforts to obtain cooperation from the driver, whose position remained uncertain until shortly before the disclaimer, the delay was reasonable as a matter of law. The court reversed the Appellate Division and directed entry of a declaration that Country-Wide was not obligated to defend or indemnify Preferred Trucking.

Holdings

1. An insurer's delay in disclaiming based on an insured's noncooperation is reasonable when the insurer continues diligent, good-faith efforts to secure cooperation and the insured's unwillingness to cooperate is not yet clear because the insured has exhibited sporadic cooperation or promises to cooperate.
2. Country-Wide was not obligated to defend or indemnify Preferred Trucking in the underlying action because the insurer established that the insured's noncooperation justified the disclaimer.

Questions Presented

1. Whether Country-Wide's November 6, 2008 disclaimer based on the insureds' noncooperation was timely as a matter of law under Insurance Law § 3420(d)(2).
2. Whether Country-Wide was entitled to a declaration that it was not obligated to defend or indemnify Preferred Trucking in the underlying action.

Disposition

reversed