Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.
New York’s insurance policy disclosure requirements have undergone noteworthy changes over the past few months. On December 31, 2021, Governor Hochul signed the Comprehensive Insurance Disclosure Act (the “Act”) into law. Prior to the passage of the Act, the insurance disclosure requirements under the then-existing version of Section 3101(f) of the New York State Civil Practice Laws and Rules (CPLR) merely stated that a party seeking relevant insurance information in a lawsuit “may obtain discovery of the existence and contents of any insurance agreement under which any person carrying on an insurance business may be liable …” For years, responding to requests for insurance information under CPLR 3101(f) was a generally painless task that required minimal effort. The Act sought to change, and as described below, has significantly changed, long-standing civil litigation practices in New York State.
The original version of the Act went into effect immediately, applied to all pending and future civil cases in New York State Supreme Court, and imposed incredibly extensive disclosure obligations on defendants. Among those obligations was a requirement to automatically disclose, within 60 days of answering the complaint: (1) complete copies of all policies that may be liable to satisfy part of all of a judgment; (2) applications for such policies; (3) contact information for the relevant claim adjuster(s) (name and telephone number); (4) information concerning policy limits available to satisfy a judgment and the erosion of those limits, including information about any lawsuits that have eroded, or may erode limits; and (5) the amount of any payment of attorneys’ fees that has eroded policy limits and the contact information of any attorney who received such payments. The Act also required defendants to update their insurance disclosures within 30 days of any change. The original version of the Act would have required all pending civil litigations to come into compliance with the disclosure requirements by March 1, 2022.
Amendments to the Act Lessen the Burden on Defendants
Fortunately, on February 25, 2022, Governor Hochul signed into law a number of amendments that curtailed some, but not all, of the overly expansive disclosure requirements originally imposed by the Act. Of significance, Governor Hochul signed an amendment clarifying that the Act no longer applies to lawsuits filed before December 31, 2021. Other amendments extend the insurance disclosure requirements from 60 to 90 days following the answer of the complaint and remove the requirement to disclose information relating to attorneys’ fees that have eroded the applicable policy
Currently, the Act applies only to lawsuits commenced after December 31, 2021. Therefore, for any lawsuit commenced after December 31, 2021, if insurance coverage is available, a defendant (including a third-party defendant or a defendant on a cross-claim or counter-claim) must disclose automatically the following within 90 days of answering the complaint:
- The identity of all insurance policies that may be liable to satisfy a judgment in the action;
- A copy of the full policy for any insurance that may provide coverage for judgment in the action. However, a declaration page can be provided in lieu of the full policy if the plaintiff agrees in writing. If the plaintiff does accept a declaration page, they do not forgo the right to later receive any other information required under CPLR 3101(f);
- The identity of the individual responsible for adjusting the claim at issue, including that individual’s name and email address; and
- The total limits available under any policy, which shall mean the actual funds, after taking into account erosion and any other offsets, that can be used to satisfy a judgment.1
With respect to providing updated insurance disclosures, the amended Act now requires defendants to supplement their disclosures, if there is any change to the initially disclosed information, at: (1) the filing of the note of issue; (2) when entering into any formal settlement negotiations conducted or supervised by the court; (3) at a voluntary mediation; (4) when the case is called for trial; and (5) 60 days after any settlement or entry of final judgment in the case, inclusive of all appeals.2
The amended Act also requires that when disclosing the above-referenced information, defendants (or their counsel) must, pursuant to CPLR 3122-b, provide a certification, sworn in the form of an affidavit or affirmation, where appropriate, stating that the information is accurate and complete and that reasonable efforts have been undertaken to ensure that the information remains accurate and complete.
Even though the amended Act removed many burdensome requirements, issues still remain. While employers do not have to disclose detailed information about prior lawsuits, claims, and attorneys’ fees that have eroded or may erode applicable policy limits, they still must gather, calculate, track, and update relevant information about any policy’s erosion, as they will be required to inform plaintiffs of the total limits available under any policy and certify under oath that the information being disclosed is accurate.
How Can Employers Prepare?
Besides communicating with counsel early on when served with a complaint, employers should understand the requirements of the Act and have the applicable information readily available, as the Act imposes a mandatory disclosure requirement within 90 days of answering the complaint.
1 See CPLR 3101(f)(1)(i)-(iv).
2 See CPLR 3101(f)(2).