Defendant, which directly insured Arnell, did not receive any notice of the underlying accident for five years. AIU Insurance, which also insured Arnell under a "wrap-up" policy issued to plaintiff New York City School Construction Authority, undertook the costs of defense of the personal injury lawsuit. AIU made a demand to defendant to coinsure Arnell after the litigation had been ongoing for four years.
While an insurer must give timely notice of disclaimer to its insured even where, as here, the insurer has not in the first instance received timely notice of the accident ( see Matter of Nationwide Mut. Ins. Co. v. Steiner, 199 AD2d 507), the duty to disclaim as soon as is reasonably possible (Insurance Law § 3420 [d]) is not triggered where, as here, the request is for contribution by a coinsurer ( Tops Mkts. v. Maryland Cas., 267 AD2d 999, 1000). "The purpose of Insurance Law § 3420 (d) is to protect the insured, the injured party `and any other interested party who has a real stake in the outcome' from prejudice resulting from a belated denial of coverage" ( id., quoting Excelsior Ins. Co. v. Antretter Contr. Corp., 262 AD2d 124, 127). That the protection of the statute is inapplicable to a coinsurer's request for contribution is demonstrated by the facts of this case. AIU received notice of the accident, conducted an investigation, undertook the defense of the lawsuit and managed the defense on its own for four years. Manifestly, it has not been prejudiced by any late disclaimer by Investors.