The New York Court of Appeals, applying New York law, has held that an insured contractor’s timely notice of a claim to its broker did not constitute the notice to the insurer required under the policy.  Strauss Painting, Inc. v. Mt. Hawley Ins. Co., 2014 WL 6607338 (N.Y. Nov. 24, 2014).

The insured contractor had agreed to perform work on the premises of the Metropolitan Opera Association and to indemnify the opera house for bodily injury claims in connection with work performed by the contractor or any of its subcontractors.  An employee of a subcontractor was injured when he fell from a ladder located on the sixth floor of the opera house.  The contractor’s operations manager first learned of the accident the same day.  The next day, the operations manager spoke with the contractor’s insurance broker about upcoming liability insurance renewals and mentioned the accident.  The contractor asserted that the broker led it to believe that there was no need to notify its commercial general liability insurer because the accident would be considered a workers’ compensation claim.

Approximately two months after the accident, the injured worker sued the opera house, which promptly sought indemnification from the contractor.  Approximately two months after that and approximately four months in total after the date of the accident, the contractor’s commercial general liability insurer received notice of the opera house’s claim for indemnification.  The insurer denied coverage on the basis of late notice.  The contractor then brought suit against the insurer and the opera house, seeking a declaration that the insurer was obligated to defend it against the opera house’s claim for indemnification.  The trial court held that the contractor’s delay in notifying the insurer was unreasonable as a matter of law, and the intermediate appellate court affirmed.

The New York Court of Appeals affirmed.  The court reiterated its longstanding holding that, since the broker is normally the agent of the insured, a policyholder’s timely notice to a broker does not constitute the notice to the insurer contemplated by an insurance policy.  The court explained that its decision in Mighty Midgets v. Centennial Insurance Co., 47 N.Y.2d 12 (1979), did not change this result because that case turned on unusual and extenuating facts that were not remotely comparable to the facts here.  Specifically, the court found no indication that the insurer and broker had a relationship sufficiently close to suggest that notice to the broker was effectively notice to the insurer.  The court also noted that, unlike the 21-year-old insured representative in Mighty Midgets, the contractor’s operations manager was not unsophisticated or unusually dependent on the broker for advice and guidance.  The court concluded that the contractor’s notice to the broker did not constitute notice to the insurer and that its four-month delay in giving notice to the insurer was untimely as a matter of law.