
    Hartford Insurance Company, Respondent, v County of Nassau, Appellant, and Richard A. Jaeger, Respondent, et al., Defendants.
    Argued February 12,1979;
    decided March 29, 1979
    APPEARANCES OF COUNSEL
    
      Edward G. McCabe, County Attorney (Robert O. Boyhan and Matthew A. Tedone of counsel), for appellant.
    
      James M. O’Brien for Hartford Insurance Company, respondent.
    
      
      Raymond J. MacDonnell, Philip Hoffer, Rose L. Hoffer and Peter T. Affatato for Richard A. Jaeger, respondent.
   OPINION OF THE COURT

Memorandum.

The order appealed from should be reversed, with costs, and the judgment of Supreme Court, Nassau County, reinstated.

In order to effectively disclaim liability or deny coverage for death or bodily injury under an automobile liability insurance policy, an insurer must "give written notice as soon as is reasonably possible of such disclaimer of liability or denial of coverage” (Insurance Law, § 167, subd 8). A failure by the insurer to give such notice as soon as is reasonably possible after it first learns of the accident or of grounds for disclaimer of liability or denial of coverage, precludes effective disclaimer or denial (see Allstate Ins. Co. v Gross, 27 NY2d 263; Matter of Allstate Ins. Co. [Frank], 44 NY2d 897).

In the instant case, which was submitted to the courts upon an agreed statement of facts, the insurer was first notified of the accident on November 4, 1976, more than 45 months after the date of the accident. Rather than sending any notice of disclaimer of liability or denial of coverage to the insured, the insurer instead commenced this action seeking a declaration of its obligations under the policy on January 5, 1977, some two months after it first received notice of the accident. No explanation whatsoever was given for this two-month delay by the insurer. The only thing which the record indicates that the insurer did during the two-month period was to send a letter to the insured agreeing to defend it in the pending tort suit but reserving any rights the insurer might otherwise have. This letter, of course, could not serve as a notice of disclaimer of liability or denial of coverage, and would be relevant only in the event that the insured should claim that the insurer had waived its right to disclaim by conducting the defense. A reservation of rights letter has no relevance to the question whether the insurer has timely sent a notice of disclaimer of liability or denial of coverage (see Allstate Ins. Co. v Gross, supra, at p 269). As for the commencement of this action, even assuming arguendo that it could serve as a notice of disclaimer of liability or denial of coverage, we conclude that where, as here, no explanation is offered for the delay in disclaiming liability or denying coverage, a delay of two months is unreasonable as a matter of law, and hence the insurer may not disclaim liability or deny coverage in this case.

Normally the question whether a notice of disclaimer of liability or denial of coverage has been sent "as soon as is reasonably possible” is a question of fact which depends on all the facts and circumstances, especially the length of and the reason for the delay (see Allstate Ins. Co. v Gross, supra, at p 270). It is only in the exceptional case that it may be decided as a matter of law. Where, however, as here, there is absolutely no explanation for the delay provided by the insurer, a delay of two months is, as a matter of law, unreasonable.

In response to the dissent, we note that the insurer has had a full opportunity to explain the delay, and has failed to do so. Although a two-month delay may often be easily justified, if in fact there be justification, no attempt was made to do so in this case, and speculation as to possible legitimate reasons for the delay is inappropriate. It is the responsibility of the insurer to explain its delay; it is not the function of the courts to engage in speculation as to what might have happened in order to remedy a failure of proof.

Jasen, J.

(dissenting). I cannot agree with the court’s conclusion that an unexplained delay by an insurer "in disclaiming liability or denying coverage [for] two months is unreasonable as a matter of law.” I had thought the rule to be that an insurer give written notice of disclaimer of liability or denial of coverage as soon as is reasonably possible. (Insurance Law, § 167, subd 8.) As a foundation, the statute requires "unreasonableness” as a standard for delay; thus, no specific time period is deemed to constitute undue delay. "Rather the question of unreasonablenss”, we said in Allstate Ins. Co. v Gross (27 NY2d 263, 270), "becomes a question of fact, or if extreme, of law, depending upon the circumstances of the case which make it reasonable for the insurer to take more or less time to make, complete, and act diligently on its investigation of its coverage or breach of conditions in its policy.” (Emphasis supplied.)

The agreed statement of facts discloses that the insurer was first notified by the county of the accident nearly four years after the date of the accident. Forthwith, the insurer provided a defense and within 11 days advised the insured county by letter of its reservation of rights as to coverage. Within two months, insurer commenced this action for declaratory judgment to disclaim liability and coverage under the insurance policy issued by the insurer.

Based on these undisputed facts and circumstances, can it be said that, even without explanation, the period of two months was an unreasonable or extreme delay, as a matter of law, in commencing the declaratory judgment action to disclaim? I think not. The question is the promptness and forthrightness of the insurer’s response to the insured’s unreasonable delay in notifying the insurer of its claim. It seems most unfair to hold, as the majority does, that the insured county had nearly four years to notify the insurer of the existence of the claim and that the insurer must review a stale claim on the eve of trial and make an absolute decision to disclaim in less than two months. To so hold, the majority ignores the realities of the situation presented — to wit, the additional time required to investigate an accident which occurred almost four years prior to notification of the claim. It should further be stressed that if the insurer errs in its decision to disclaim coverage, a possibility enhanced by the necessity to conduct a hasty investigation, it will be subjected to an action to compel it to defend. (See Downey v Merchants Mut. Ins. Co., 30 AD2d 171, affd 23 NY2d 989.)

In addition, it should be emphasized that this case was decided upon an agreed statement of facts; thus, the parties were not accorded a full opportunity, in a trial setting, to establish their respective positions. While it could be argued that the insurer should not now be permitted to take refuge behind its failure, or more likely, oversight, to include statements which would justify its delay, I would think such justification is implicit in the peculiar circumstances presented by this case.

For these reasons, I agree with the unanimous court at the Appellate Division that "under the facts of this case, the insurer’s delay in disclaiming was not unreasonable as a matter of law (cf., Allstate Ins. Co. v Gross, 27 NY2d 263)” and, accordingly, would aifirm.

Chief Judge Cooke and Judges Gabrielli, Jones, Wachtler and Fuchsberg concur in memorandum; Judge Jasen dissents and votes to aifirm in a separate opinion.

Order reversed, etc.  