Insurance disclosure requirements have just become far more complex and onerous for parties that face litigation in New York state courts. In our January article (updated in February), we discussed the particulars of New York’s new Comprehensive Insurance Disclosure Act as it stood when the legislation was signed into law in late December 2021 and as contemplated by amendments proposed by the governor and being considered by the legislature. In late February, many of these proposed amendments were enacted into law.
With the law now seemingly settled, defendants are just beginning to grapple with this legislation, including developing long-term strategies for managing disclosures, taking stock of insurance-related information to get ahead of disclosure obligations, and initiating conversations with insurance coverage counsel, brokers and insurers. Until New York courts provide more direction regarding the application of the law, advance preparation and planning by policyholders to satisfy the legislation’s requirements will be key.
As indicated above, the Comprehensive Insurance Disclosure Act was amended shortly after its passage. Three of these amendments in particular are worth noting. First, where the original version of the law was retroactive in applying to all existing lawsuits, the law now is limited to only those lawsuits filed on or after January 1, 2022. Second, defendants now have 90, rather than 60, days after service of an Answer to disclose the insurance-related information required by the law. Third, the law is no longer confined to policies sold or delivered in New York; instead, defendants must disclose responsive policies regardless of where the policy was procured or delivered.
Other core requirements of the law
In addition to these requirements, the new law in its final form includes extensive disclosure requirements. Defendants must disclose:
- A full copy of all primary, excess and umbrella policies in place at the time of the loss that relate to the claim being litigated, and under which an insurer may be liable to satisfy part of all of a judgment in the lawsuit. If plaintiff’s counsel agrees, a Declaration Page may be provided in lieu of a complete copy of the policies, but plaintiffs can ask for complete copies later.
- Remaining limits available under any policy, factoring in erosion or other offsets.
- Name and contact information, including email address, of an assigned person responsible for adjusting the claim, i.e., the insurance adjuster/TPA.
Along with these requirements, defendants must make reasonable efforts to ensure the continued accuracy of this information and to provide updated information at several points throughout the litigation, including the filing of the Note of Issue; entering formal settlement negotiations or voluntary mediation; commencement of trial; and 60 days after any settlement or entry of final judgment. Additionally, the law places the onus on both the disclosing party and its counsel to certify the disclosures are accurate and complete.
These provisions raise several issues that policyholders and insurers are struggling to understand. As noted in our prior article on the legislation, the disclosure requirement for policies “in place at the time of the loss” is ambiguous at best given the divergent triggering provisions present in different policy forms. Moreover, it is unclear whether the requirement to disclose policies that “may be liable” and that “relate to the claim being litigated” vests defendants with significant discretion to make a practical decision as to whether a policy is likely to be implicated by a claim, or will be interpreted by courts to require maximum disclosure. Lastly, the law includes “self-insurance programs” as an element of the insurance policy documentation required to be disclosed. A self-insured retention (“SIR”), however, is not “insurance” under New York law nor is it an insurance policy, which creates a good deal of confusion about a defendant’s obligations under CIDA where the claim is likely to fall within its SIR.
Barring further amendments to the law, New York courts ultimately will decide the scope of the disclosure requirement in the course of resolving discovery disputes as they arise. For the time being, until these standards become more certain, policyholders that regularly are brought into litigation in New York should consider establishing a long-term strategy for managing these disclosure requirements in consultation with counsel.
Along these lines, companies anticipating New York state litigation should take inventory of current policies and exhaustion information to determine what, if any, information will be needed to respond in the event of litigation in New York. To the extent information is needed, most policyholders should consider reaching out to their insurers promptly to obtain this information.
Policyholders also are advised to engage insurers regarding strategic issues concerning disclosure. For example, some observers are asserting that “boilerplate” lawsuits lacking specific allegations of wrongful conduct (for example, initial Complaints alleging asbestos exposure) may not necessitate disclosure of any policies at all, as such allegations do not show that a policy “relate[s] to the claim being litigated.” Others are advocating for broad disclosure in light of the overall purpose of the law to encourage transparency. Regardless of what approach a defendant takes regarding these issues, taking the time early to work through these issues with litigation counsel, coverage counsel, brokers and insurers will pay off and avoid fire drills in the run-up to disclosure deadlines.