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Appellate Court Concludes Burden of Proof for Insurance Coverage is on the Claimants

Accepting the second aspect of the personal injury contention–that the conditions precedent are alternatives–it is my finding on the facts that none of the several situations set forth in the statutes has been proven here. As pointed out above, Numbers (1), (2) and (7) were not in issue and, as to Numbers (3) and (6), there was uncontradicted and credible testimony that there was a liability policy in effect on the Ortiz car at the time in question, and that the insurer had neither disclaimed liability nor denied coverage with regard to the accident. And there was no proof that the alleged driver did not have coverage. There thus remain for consideration situations Number (4) and Number (5)–that is, whether the vehicle in question was either stolen or otherwise operated without the permission of its owner.

The petitioners urge that, as a matter of law, the vehicle must be considered ‘uninsured’ because (1) there was no permissive use, the vehicle having been stolen–a contention which I shall discuss shortly–and (2) the policy is unenforcible–i. e., the insurer is not liable, because (a) there was no notice to it and (b) there was no filing of an accident report with the Department of Motor Vehicles.

In support of this latter argument–of the unenforcibility of the policy–the petitioners rely upon the case of MVAIC v. American Southern Insurance Company, 44 Misc.2d 525, at page 527, 254 N.Y.S.2d 44, at page 46, quoting therefrom the following language: It affirmatively appears that neither plaintiff nor defendant’s insured complied with the notice requirements of the policy, conditions precedent to any recovery thereon, and that, as a matter of law, the types of notice mandated were not afforded, the notification finally given was untimely, and the delay involved was unreasonable.

In the personal injury case last cited hereinabove and in the case therein cited the insurer was the defendant and asserted its defense of non-compliance with the notice requirements of the policy. Thus, that issue was properly before the court. But here, the issue of disclaimer of liability is not before me, there having been none. Had such disclaimer been made, I would be bound to determine its validity. This is, in my view, the effect of the recent holding of the Court of Appeals of this State in Matter of MVAIC (Malone), 16 N.Y.2d 1027, 265 N.Y.S.2d 906, 213 N.E.2d 316, (November 24, 1965), supra, which overruled a substantial body of case law which had held that the fact, rather than the validity, of a disclaimer was all that was necessary as a condition precedent to arbitration.

The petitioners also place reliance upon a report by Special Referee Tripp in Matter of Leahy v. Allstate Insurance Company, Index No. 13 563/1964, Supreme Court, Queens County, dated June 18, 1965. In particular, the petitioners rely upon the Referee’s determination that an insurer has no duty to pay if the vehicle is stolen or, at any rate, operated without permission, which was an essential circumstance proven to the referee’s satisfaction in that matter. That holding, to which no exception is taken by me, is entirely beside the point here.

The petitioners apparently seek to prevail upon the theory that their only hope of recovery is in the present proceeding since any claim which they would now make against the insurer of the allegedly responsible vehicle might be untimely, and because the owner of that vehicle, Ortiz, did not notify his insurer. But, while that result–if it be the true one–may be unfortunate indeed, I cannot accept the proposition that the combination of the petitioners having failed to make due claim against the insurer, and the insured’s failure to notify his insurer or to file an accident report, however it may affect the enforcibility of the policy in an action against the insurer, can compel the conclusion here that, as a matter of law, the vehicle was uninsured.

It is my conclusion, moreover, that, in the instant matter, it has not been adequately proven by the petitioners that the vehicle was either stolen or operated without permission–a factual issue as to which the burden of proof was upon the claimants.

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