The Rogak Report: 03 Jul 2008 (Part I) ** SUM Claims - Policy Conditions **
WHERE CLAIMANT IS NOT THE INSURED AND HAS NO COPY OF POLICY, HE CANNOT BE FAULTED FOR NOT COMPLYING WITH POLICY TERMS
Matter of Hartford Fire Ins. Co. (Fell) 2008 NY Slip Op 06011 Decided on July 3, 2008 Appellate Division, Third Department Edited by Lawrence N. Rogak
This was an appeal from an order of the Supreme Court, Albany County (Egan Jr., J.), which denied Hartford's application pursuant to CPLR 7503 to stay SUM arbitration between the parties.
In November 2005, while operating a motor vehicle, Steven Fell was injured in an accident. The vehicle was owned and insured by Fell's employer, Sawhorse Lumber & More, Inc., and petitioner Hartford provided the insurance, including the supplementary uninsured/underinsured motorist coverage. In August 2007, Fell served Hartford with a request for arbitration regarding the supplementary uninsured/underinsured motorist coverage. Hartford commenced this proceeding seeking to permanently stay the arbitration based upon the failure of respondent Fell to abide by certain provisions of Sawhorse Lumber's insurance policy. Finding that Hartford never provided respondent the nonpolicyholder claimant with a copy of the policy or the particular provisions upon which its application was based, Supreme Court denied petitioner's application for a permanent stay of arbitration. The Appellate Division affirmed.
"The record demonstrates that respondent was not a policyholder and it is devoid of any evidence that respondent was provided with a copy of the policy or was aware of its terms. Under these circumstances, petitioner cannot rely on respondent's failure to satisfy terms of an insurance contract that he did not possess and the terms of which he was not aware to obtain a stay of arbitration (see Matter of Eveready Ins. Co. [Schwartzberg], 203 AD2d 101, 101-102 ; Matter of Eagle Ins. Co. [Chowdhury], 149 Misc 2d 227, 230 )."
"ORDERED that the order is affirmed, with costs."
Comment: The Appellate Division's ruling, I submit, makes sense. If a claimant is going to be held to the terms of a policy, he should at least have an opportunity to know what the policy says. If the claimant is not an insured or additional insured, he is not going to have a copy of the policy. Therefore, it would make a wise business practice for all auto insurers to prepare a letter containing the essential terms of the policy, at least those terms which require compliance on the part of a claimant, and send this letter to all non-policyholder claimants at the first notice of a claim. That way, the claimant can be held to the terms of the policy and possibly punished for non-compliance.