Skip to Main Content
Services Talent Knowledge
Site Search


Our attorneys stay on top of changes in legislation, agency regulations, case law, and industry trends—then craft timely legal alerts to keep clients up to date on legal developments important to their business.

January 29, 2015

Failure to Notify Insured of a Coverage Reduction on Policy Renewal Subjects Insurer to General Business Law §349 Liability Exposure

The Appellate Division, Second Department, recently considered an appeal regarding the failure of an insurer to comply with the statutory requirements of Insurance Law §3425(d) upon renewal of a homeowner's policy of insurance. Valentine vs. Quincy Mutual Fire Insurance Company, A.D. 2d Dep't. (December 24, 2014).

Plaintiffs purchased a homeowner's insurance policy from Quincy Mutual Fire Insurance Company through an insurance broker, Tim Sheridan Insurance. The policy contained an endorsement which provided full replacement cost coverage for real and personal property.

In 2009, Quincy applied to the New York State Department of Insurance for permission to substitute a revised "replacement cost" endorsement to its homeowners' insurance policies which limited replacement cost recovery to an additional 25 percent above the policy limit. With the permission of the Insurance Department, Quincy sent an advisory notice regarding the change in the policy terms to Tim Sheridan, as the plaintiffs' insurance broker, along with the policy renewal for the 2009/10 year, but did not send the notice directly to the insureds.

Plaintiffs' home was destroyed by fire on October 16, 2010. Upon being advised of the reduced coverage for replacement cost, plaintiffs commenced an action against both Quincy and Sheridan alleging causes of action to recover damages for breach of contract, as well as violations of General Business Law §349 (which provides for recovery of treble damages and attorneys' fees for deceptive business practices) and Insurance Law §3425(d).

After completion of discovery, all parties moved, or cross-moved, for summary judgment. Supreme Court concluded that Quincy violated Insurance Law §3425(d) by failing to directly notify the insureds of the policy reduction in coverage, and held that the original replacement cost coverage endorsement under the 2008/09 policy remained in effect on the date of loss. The lower court also held that there were triable issues of fact as to whether the plaintiffs had met the terms and conditions of the replacement cost endorsement. In addition, Supreme Court granted Quincy's cross-motion for summary judgment dismissing the General Business Law §349 cause of action.

On motions to re-argue, Supreme Court adhered to its original decision, but amended its prior order by awarding summary judgment to Quincy declaring that the 2008/09 insurance policy, rather than the 2009/10 policy, (which was more favorable to the plaintiffs), was in force and effect on the date of loss.

On appeal, the Appellate Division, Second Department, held that Supreme Court erred in dismissing Plaintiffs' General Business Law §349 cause of action. The Court held that Quincy did not demonstrate prima facie that its failure to comply with the §3425(d) notice requirements did not constitute a deceptive business practice stating:

Quincy, in its submissions, admitted that it sought to change and reduce coverage by eliminating a particular endorsement to its New York homeowners' insurance policies, including the plaintiffs' insurance policy. Upon the plaintiffs' renewal of the policy, Quincy eliminated the endorsement, but failed to notify those insureds of that change in the manner prescribed by the Insurance Law.

The Court also reversed the lower court which had held that Tim Sheridan was not entitled to summary judgment dismissing Quincy's cross-claim against it for common law indemnification. The Appellate Division held that under Insurance Law §3425(d), Quincy had the sole obligation and responsibility to notify its insureds directly of a change in the policy terms.

Finally, the Court held that plaintiffs were entitled to the benefit of the eliminated coverage that was provided under the replacement cost endorsement to the 2008/09 policy, along with the terms of the 2009/10 renewal policy which was in effect on the date of the fire.

This decision highlights the necessity of strict compliance with the requirements of Insurance Law §3425(d), by providing written notice directly to the named insureds of any change or reduction in coverage upon policy renewals and the potential for damages under General Business Law §349 for failure to do so.


 Should you have questions regarding the information presented in this alert, please contact Anthony J. Piazza, Chair of the firm's Insurance Coverage & Regulation Practice Area, at (585) 295-4420 or


Click here to sign up for alerts, blog posts, and firm news.

Featured Media


EPA Lists Two New "Forever Chemicals" Under CERCLA


NYS Governor Hochul Announces Final RFP for New Certified Community Behavioral Health Clinics


The Second Department Affirms Successful Storm in Progress Defense of Slip and Fall Case


The New York FY 2025 Budget – CDPAP FIs Under Threat


Website Accessibility Lawsuits: Several "Tester" Plaintiffs—Anderson, Beauchamp, Murray, Angeles, Monegro, and Bullock—Targeting Businesses in Recent Flurry of Lawsuits


Updated Bulletin on Tracking Technologies in the Health Care Industry

We're Growing in DC!

We’re excited to announce Barclay Damon’s combination with Washington DC–based Shapiro, Lifschitz & Schram. SLS’s 10 lawyers, three paralegals, and four administrative staff will join Barclay Damon while maintaining their current office in DC’s central business district. Our clients will benefit from SLS’s corporate, real estate, finance, and construction litigation experience and national energy-industry profile, and their clients from our full range of services.

Read More

This site uses cookies to give you the best experience possible on our site and in some cases direct advertisements to you based upon your use of our site.

By clicking [I agree], you are agreeing to our use of cookies. For information on what cookies we use and how to manage our use of cookies, please visit our Privacy Statement.

I AgreeOpt-Out