Zappone v. Home Insurance , 80 A.D.2d 661 ( 1981 )

Appeal from a judgment of the Supreme Court in favor of plaintiffs, entered February 22, 1980 in Saratoga County, upon a decision of the court at a Trial Term, without a jury. The question to be resolved on this appeal is whether subdivision 8 of section 167 of the Insurance Law, which requires that a liability insurer give written notice as soon as is reasonably possible of its disclaimer of liability or denial of coverage, applies where, under the terms of the insurance policy, there is no coverage. The facts are not in dispute. On July 20, 1975, a 1966 Mercedes Benz driven by plaintiff Michael Zappone and owned by his sister, plaintiff Judith Zappone, was involved in a collision which caused bodily injury to third parties and, in November of 1975, two of the injured parties commenced legal action against Michael and Judith Zap-pone to recover damages. The insurer of the Mercedes Benz, Aetna Insurance Company (Aetna), undertook their defense to this action and has offered to settle the matter up to the limits of its policy. At the time of the accident, Judith Zappone also owned a 1970 MG which was insured by the defendant Home Insurance Company (Home). In addition, Home insured a Chevrolet automobile owned by Dominick Zappone, the father of Michael and Judith. For many years prior to the incident, the Zappones lived together in the same household at Mechanicville, New York. On January 6, 1976, they notified Home of the accident which had occurred on July 20, 1975. Two weeks later Home responded that the policies issued to Judith and Dominick Zappone might not afford coverage, but that it would investigate the incident. However, it was not until April 14, 1977, some 15 months later, that Home forwarded a letter to Dominick and Judith Zappone advising them that their policies did not provide excess coverage beyond Aetna’s primary responsibility because the Mercedes Benz was neither an “owned automobile” nor a “non-owned automobile” under the terms and definitions of the Home policies. In September of 1979 the within action- for a declaratory judgment was commenced seeking, among other things, a determination that the denial of coverage was invalid and in violation of subdivision 8 of section 167 of the Insurance Law and that the Zappones are entitled to excess coverage by Home. The trial court found that the 15-month delay by Home was “unreasonable, untimely, invalid and ineffective” to relieve it of an obligation to defend and indemnify the Zappones. This appeal ensued. At the time of the accident, subdivision 8 of section 167 of the Insurance Law provided as follows: “If under a liability policy delivered or issued for delivery in this state, an insurer shall disclaim liability or deny coverage for death or bodily injury arising out of a motor vehicle accident occurring within this state, it shall give written notice as soon as is reasonably possible of such disclaimer of liability or denial of coverage to the insured and the injured person or any other claimant.” The requirements of this subdivision have been interpreted liberally on numerous occasions, and it is well established that if there is an unreasonable delay in giving notice of disclaimer by the carrier, such notice is ineffective (Hartford Ins. Co. v County of Nassau, 46 NY 1028, 1029; Allstate Ins. Co. v Gross, 27 NY2d 263, 266). Moreover since the wording of the statute is clear and unequivocal, with no exceptions or exclusions, it applies to excess as well as primary insurers (Preisch v Continental Cas. Co., 55 AD2d 117, 121, mot for lv to app den 41 NY2d 802; cf. Home Ind. Co. v State Farm Mut. Auto. Ins. Co., 64 AD2d 212). A delay of 15 months in the notification process is plainly unreasonable. Indeed, a delay of only two months has been held unreasonable as a matter of law (see Hartford Ins. Co. v County of Nassau, supra, p 1030). However, in the instant case, we are faced with a considerably different legal question. Here, under the terms of the Home policies, there never was any coverage from the time the contracts of insurance were first written. The Mercedes Benz was not described in either policy. Thus, it was not an “owned vehicle.” Since the vehicle was regularly and frequently used by Michael Zappone for business and social functions, coverage was not furnished by Home as a “non-owned” automobile (McMahon v Boston Old Colony Ins. Co., 67 AD2d 757, 758). Therefore, the use of the Mercedes Benz by Michael was not insured by Home. That being so, it would be completely illogical to require that an insurer give notice under these circumstances. We believe that the term “denial of coverage” refers to those instances in which insurance covering the event could be said to exist but for some nonpayment of premiums, cancellation, or other exclusion that would arguably defeat such coverage. It cannot be thought that the Legislature intended to impose an obligation to insure when no contractual relationship existed in the first instance. The mischief resulting from a contrary interpretation is self-evident and needs no further comment. Preisch v Continental Cas. Co. (55 AD2d 117, supra) and Home Ind. Co. v State Farm Mut. Auto. Ins. Co. (64 AD2d 212, supra), relied upon by plaintiffs, are clearly distinguishable and factually inapposite. Accordingly, there must be a reversal. Judgment reversed, on the law, with costs, and judgment directed to be entered declaring that Home Insurance Company was not required to give notice of denial of coverage to any of the plaintiffs under subdivision 8 of section 167 of the Insurance Law and that the policies of insurance issued to plaintiffs Zappone by Home Insurance Company were not in effect and did not provide coverage for the incident of July 20, 1975. Mahoney, P. J., Kane and Herlihy, JJ., concur.