New York’s Insurance Coverage Disclosure Rule Changes
Prior to the signing of S7052, New York’s civil procedure rules stated that defendants could be asked to disclose information about an insurance policy that might be called upon to satisfy a judgment. Disclosed information could include whether any such policy exists and, if so, what it contains. The rule did not, however, require affirmative or unrequested disclosure by defendants.
S7052 placed several new demands on defendants when it comes to disclosing insurance information. Under the new law, defendants must disclose:
- All insurance contracts, including primary, excess, and umbrella coverages, and complete copies of all such policies
- Copies of any applications for insurance, including for coverage then purchased
- The contact information of a claims adjuster or third-party adjuster
- The amounts available under the insurance policy
- Any lawsuits that have or might reduce or erode the amounts available under the insurance policy
- If any such lawsuits exist, contact information for the attorneys for all represented parties in those lawsuits
- The amounts paid in attorneys’ fees, if any, that have reduced the face value of the policy and the contact information for any attorney who received the payments
Defendants and their attorneys also must swear to the accuracy of these disclosures in a certification. The newly-enacted CPLR 3122-b. covers the rules for the certification.
The defense is also held to an ongoing obligation to update this information “during the entire pendency of the litigation and for 60 days after any settlement or entry of final judgment in the case inclusive of all appeals.”
How the New Insurance Coverage Disclosure Rules Will Affect Product Liability Cases in New York
Under the new rules, defendants have a number of new obligations and a short timetable to meet many of them. The new rules require that defendants provide proof of the existence and contents of insurance policies. Defendants have to provide proof within 60 days of filing an answer in a civil suit.
Defendants’ “ongoing” obligation to update this information is also subject to time limits. The defense must provide updates within 30 days of receiving the new information. And not even the end of the litigation absolves defendants of this obligation. Defendants must provide updates for 60 days after any settlement, entry of final judgment, or appeal.
These new rules mean more legwork for defense counsel in a wide range of cases. However, they may prove to be most onerous in product liability claims.
Most consumer products pass through several parties responsible for aspects of manufacture, design, packaging, shipping, and handling. As such, many product liability claims have several defendants. Each defendant is responsible under these rules for disclosing insurance information. When defendants have multiple potentially applicable policies, a veritable snowstorm of paperwork may result.
The challenge will increase further when defendants must calculate the erosion of policy limits due to payments made on any previous or pending claims. Often, payments are made over a period of many years. To accurately calculate erosion of policy limits, defense attorneys and their clients may need to engage in extensive data analysis.
A New Future for Civil Litigation in New York
While the bill’s sponsor memo notes that these issues commonly arise in personal injury cases, it clarifies that the new rules apply to other types of cases as well. Consequently, the new rules will have a sweeping effect on civil litigation in New York.
The bill affects not only cases filed in 2022 and beyond, but also cases already pending in New York. Under the new rules, any required disclosures that have not been made in pending cases by the bill’s effective date of March 1, 2022 must be made within 60 days of that date.
According to the bill’s sponsors, the changes address two main goals. They seek to clarify which insurance information defendants must disclose and when. They also seek to reduce delays in cases by requiring defendants to make the disclosures up front. Time will tell whether the new rules succeed in fulfilling these goals.