Background
Jacaeber Kastor was involved in an automobile accident. He held an automobile/liability insurance policy through USAA Casualty Insurance Company containing a Supplemental Uninsured/Underinsured Motorist Endorsement (SUM) that replaced the standard “uninsured motorist” (UM) coverage in Part C of the policy. The SUM endorsement tracked the language required by Insurance Law § 3420(f) and 11 NYCRR 60-2.3(f).
After the accident, Kastor’s counsel sent a letter to USAA asserting a UM/SUM claim and transmitted Kastor’s sworn no-fault NF-2 application. Neither document identified the accident as a hit-and-run. An MV-104 accident report provided to USAA more than three months later also did not identify the accident as a hit-and-run. Kastor demanded uninsured motorist arbitration nearly eleven months after the accident — the first time he identified the accident as a hit-and-run. USAA petitioned to permanently stay arbitration, arguing Kastor failed to comply with the notice requirements of the SUM endorsement. Supreme Court granted the stay. The First Department unanimously affirmed.
The Court’s Holding
The court held that USAA had the right to disclaim SUM coverage because Kastor failed to comply with the policy’s notice requirements. The SUM endorsement required the insured to file a sworn statement setting forth the facts of the claim — including the hit-and-run nature of the accident, the physical contact between vehicles, and due diligence to identify the offending vehicle or an explanation of why its identity was unascertainable. None of the documents Kastor submitted before the arbitration demand satisfied these requirements. Although his counsel’s claim letter and the NF-2 no-fault application were timely and sworn, they: (1) did not identify the accident as a hit-and-run; (2) did not establish the requisite physical contact between vehicles; and (3) did not indicate whether the offending vehicle’s identity was unascertainable or describe any due-diligence steps taken.
The court rejected Kastor’s argument that the no-fault application served as adequate notice. Despite being sworn, it did not contain the specific disclosures required by Insurance Law § 3420(f)(3) — the provision governing hit-and-run claims under uninsured motorist coverage. The court also rejected the argument that the policy’s UM/SUM notice requirements were ambiguous: the SUM endorsement expressly replaced Part C of the policy and tracked the statutory language, leaving no room for misinterpretation.
Key Takeaways
- A hit-and-run UM/SUM claimant must submit a sworn statement that specifically identifies the accident as a hit-and-run, establishes physical contact between the vehicles, and states that the offending vehicle’s identity is unascertainable (or demonstrates due diligence to ascertain it) — generic no-fault applications and prompt claim letters do not substitute for these specific disclosures.
- A SUM endorsement that expressly replaces the base UM coverage and tracks Insurance Law § 3420(f) language is unambiguous; courts will not strain to find ambiguity that permits the insured to avoid compliance with explicit notice conditions.
- The failure to identify an accident as a hit-and-run until the arbitration demand — nearly a year after the accident — is fatal to UM/SUM coverage; notice obligations must be fulfilled while the facts are fresh and the insurer can investigate.
- Counsel for UM/SUM claimants should immediately send a comprehensive sworn statement upon learning a claim may involve an unidentified vehicle, setting out all required elements even before formal discovery about the physical contact is completed.
Why It Matters
This decision reinforces strict compliance with New York’s UM/SUM notice requirements. New York’s Insurance Law imposes specific and non-waivable conditions on hit-and-run UM/SUM claims to guard against fraud — and courts have consistently upheld insurer disclaimers when those conditions are not met, regardless of whether the insured was represented by counsel. For plaintiffs’ attorneys handling automobile accident cases: the moment a client reports that the other driver fled or cannot be identified, a comprehensive sworn statement should be sent to all applicable insurers identifying the hit-and-run nature of the accident, describing the physical contact, and providing whatever information is available about efforts to identify the vehicle. Waiting until arbitration to make these disclosures — as Kastor did here — will result in a permanent stay and the loss of UM/SUM coverage entirely.