On December 31, 2021, New York State Governor Hochul signed into law the Comprehensive Insurance Disclosure Act. It is essential to note that this law applies both to actions filed in the future as well as pending actions. Despite the fact that it is potentially onerous in its application, we believe that its adverse impact can be mitigated by a careful reading of the governing statute.
Material Amendments to Policy Disclosures Pursuant to CPLR 3101(f)(2)
Disclosure of Full Insurance Policies
Automatic disclosure – defendants to provide plaintiffs with complete information for any insurance agreement inclusive of primary, excess and umbrella policies through which a judgment could be satisfied within 60 days after serving an answer. We expect the plaintiff’s bar to demand insurance applications under this provision; however, we do not believe that the insurance application in most cases will be deemed “material and necessary” to the litigation and thus protected under CPLR 3101(a) and therefore its disclosure, albeit now identified as part of the policy, will not be part of our recommended disclosures.
Disclosure of the carrier/TPA contact information, including the telephone number and e-mail address, of any person(s) responsible for adjusting the claim.
Ongoing Disclosure Obligation – Throughout the pendency of the litigation and for a period of 60 days following settlement or entry of judgment, the Defendants have an ongoing obligation to ensure that the insurance information is accurate and complete, and must provide updated information within 30 days of receiving information that renders the prior disclosure inaccurate or incomplete.
Eroding Insurance Policies
For the first time, mandatory insurance disclosure includes any events that would result in the erosion of policy limits. To be clear, this information was always essential to reserving and settlement posture, however, the new statute requires disclosure of settlements, attorneys fees or anything that would reduce the available insurance per the limits. Also included is the disclosure of the name and address of any attorney who received such payments.
Insurance Disclosures Now Require Certification
C.P.L.R. 3122-b, a newly added statutory provision now requires information provided pursuant to subdivision (f) of section 3101 to be certified as accurate and complete by the defendant and its attorney.
Retroactive Effect of New Statute – Applicability to all Pending Actions
The Statute expressly brings all pending actions under its purview. To that end, any insurance information required to be disclosed by the new law which has not already been disclosed previously, must be provided within 60 days after the date that the law shall become effective.
Practice Guidelines – Carrier and Counsel
At the inception of any new suit or within 60 days of the new statute’s effective date, the carrier and counsel are required to exchange the following:
- “All” primary, excess, and umbrella policies
- Complete copies of the policies
- The contact information (including phone number and email address) of insurance representatives/adjusters and third-party administrator representatives
- The policy limits (or residual limits if applicable)
- Any lawsuits and attorneys fees that have reduced/eroded, or that may reduce/erode the limits, including the caption, date of filing, and identity/contact information of the parties;
Throughout the pendency of any suit, the carrier and counsel are obligated to notify plaintiffs of any material changes to the insurance limits including but not limited to erosion events and claim adjustor contact information.
Defense counsel best practices must also now include a review of all pending litigation, a determination as to where additional disclosures are required to bring that case into compliance with the new law and then timely make such additional disclosures.
Defense counsel must also provide a self-certification and insured certification as to the completeness and accuracy of the contents of the disclosure.
While we expect that litigation will arise over the interpretation of this statute, defense counsel and the carriers have our work cut out for us.