New York implements new insurance coverage disclosure rules for defendants

On December 31, 2021, New York Governor Kathy Hochul signed into law the Comprehensive Insurance Disclosure Act (the Act).  The Act, which took effect immediately, amends CPLR 3101(f) and adds CPLR 3122-b, and requires defendants in civil litigation to disclose extensive information regarding their insurance coverage within 60 days of filing an answer.

The Act’s disclosure requirements

As amended by the Act, CPLR 3101(f) requires defendants to disclose “the existence and contents of any insurance agreement under which any person or entity may be liable to satisfy part or all of a judgment that may be entered in the action or to indemnify or reimburse for payments made to satisfy the entry of the final judgment.”  Under amended CPLR 3101(f), defendants must now disclose within 60 days of filing their answer:

• Complete copies of all potentially applicable primary, umbrella and excess policies
• Insurance applications
• Information concerning the impairment or exhaustion of insurance policies
• Contact information for persons responsible for adjusting the claim, including any third-party administrators and the person within the insuring entity to whom the third-party administrator reports
• The amounts still available under the insurance policy to satisfy, or reimburse for, the judgment
• Any lawsuits that have reduced or eroded the limits of any available insurance and
• The amount of any payment of attorneys’ fees that have reduced or eroded the limits of any available insurance (ie, in the case of “burning limits” policies).

These new requirements significantly change the disclosure obligations under CPLR 3101(f), which previously required disclosure of only the existence and contents of relevant insurance policies when requested by another party as part of discovery.  Under the previous rule, disclosure was not automatic, nor were defendants required to disclose much of the information required by the newly enacted rule.

Furthermore, the Act now requires defendants to ensure that their disclosures remain complete and accurate on an ongoing basis, and creates CPLR 3122-b, which requires defendants and their attorneys to file certifications attesting that the information provided pursuant to CPLR 3101(f) is complete and accurate.

What New York defendants need to know

In analyzing and assessing compliance with the Act, defendants in civil litigation should know:

• The Act took effect immediately upon Governor Hochul’s signature and applies to new and pending litigations.
• The Act applies to defendants, third-party defendants and any “defendant on a cross-claim or counter-claim.”  Accordingly, all parties to a lawsuit, including a plaintiff against whom a counterclaim has been asserted, must disclose any insurance information applicable to the claims against them.
• Any information required by the Act that has not been previously provided in pending cases must be provided within 60 days after the date the Act became effective.
• Defendants’ obligations under the Act are “ongoing.”  In other words, defendants must ensure that their disclosed insurance information remains accurate and complete throughout the pendency of the litigation and for 60 days after any settlement or entry of final judgment, including any appeal.

Key takeaways

The Act’s requirements are burdensome and will likely require defendants and their counsel to collect insurance information, conduct factual investigations on policy coverage implications and analyze the scope of insurance available.  In addition, compliance may require coordination among and between defendants, their in-house risk management teams, brokers, primary insurers and counsel.  As such, defendants are encouraged to discuss the issues with their counsel as soon as possible. 

Many commentators have criticized the Act and its requirements.[1]  Perhaps as a result, lawmakers have indicated that they will consider modifying or eliminating the provisions requiring ongoing disclosure obligations, as well as those which require disclosure of particular lawsuits, attorneys’ fees and insurance applications.  Indeed, Governor Hochul has already proposed changes to the Act, such as extending the time to disclose the information to 90 days from 60 days, precluding disclosure of the defendant’s gross revenue and other business information, and limiting the type of policies that would be disclosed, as well as information concerning the claims adjuster.[2] 

DLA Piper will continue to monitor for developments with the Act, as well as cases in which parties seek compliance with the Act through motions to compel or otherwise under the CPLR. 

Learn more about this development by contacting the authors.

[1]  Eg, Richard Mason, Flawed NY Insurance Law Needs Amendments, Law360 (Jan. 10, 2022, 1:36 PM), https://www.law360.com/articles/1453611/flawed-ny-insurance-law-needs-amendments.

[2]  See Hochul Wants Revisions on Insurance Disclosure Law, Ins. L. Journal (Jan. 5, 2022), https://www.insurancejournal.com/news/east/2022/01/05/648065.htm.