UNIGARD SECURITY INSURANCE COMPANY, INC., &C., PLAINTIFF, v. NORTH RIVER
INSURANCE COMPANY, DEFENDANT.
79 N.Y.2d 576, 594 N.E.2d 571, 584 N.Y.S.2d 290 (1992).
May 5, 1992
USCOA,2 No. 92
Decided May 5, 1992
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This is uncorrected and subject to revision before publication in the
New York Reports.
Eugene Wollan, for Plaintiff.
Dennis G. Jacobs, for Defendant.
Superintendent of Insurance, amicus curiae.
HANCOCK, J.:
Under New York law, the standard provision in a contract of primary
liability insurance requiring the insured to give the insurer prompt
notice of a potential claim operates as a condition precedent; thus,
for failure to give notice, the primary insurer "need not show
prejudice before it can assert the defense of noncompliance" (Security
Mutual Ins v Acker- Fitzsimmons, 31 NY2d 436, 440). For reasons which
follow, we hold that this "no prejudice" rule does not apply to a
failure to comply with the prompt notice requirement in a contract of
reinsurance.
I.
This appeal, pursuant to section 500.17 of this Court's Rules of
Practice, certifies to us the central legal question in a declaratory
judgment action commenced in the United States District Court for the
Southern District of New York by Unigard Security Insurance Company
Inc. ("Unigard") against North River Insurance Company ("North
River"). The issue in dispute is whether Unigard must honor its
commitment under a facultative reinsurance certificate(n 1) issued
to North River covering a high layer excess insurance policy issued by
North River to Owens- Corning Fiberglass Corp. ("Owens-Corning") (see,
Unigard Sec. Ins. Co. v North River Ins. Co., 762 F Supp 566
(S.D.N.Y., Sweet, J.)).
Unigard contends that it is automatically relieved from its
obligations under the reinsurance certificate because North River
failed to give prompt notice of an "occurrence or accident which
SNIPPETS:
INSURANCE COMPANY, DEFENDANT.
This is uncorrected and subject to revision before publication in the New York Reports.
Under New York law, the standard provision in a contract of primary liability insurance
For reasons which follow, we hold that this "no prejudice" rule does not apply to a failure
This appeal, pursuant to section 500.17 of this Court's Rules of Practice, certifies to us
The issue in dispute is whether Unigard must honor its commitment under a facultative
Unigard contends that it is automatically relieved from its obligations under the reinsurance
North River maintains that before a reinsurer may avoid its responsibility because of late
Prompt notice shall be given by the company to the Underwriting Managers on behalf of the
at the reinsurer's expense in the defense and control of any claim, suit or proceeding which may
The District Court, after a nine day bench trial, found: that North River's obligation to
It rejected Unigard's late notice defense, however, holding that New York law required a
745 F Supp 150 (S.D.N.Y.
It is settled New York law that the notice provision for a primary insurer operates as a
Settlements, as well as the investigation and defense of claims are the sole responsibility
Following certification of a question by the United States Court of Appeals for the Second
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