On May 31, 1998, a vehicle owned and operated by the respondent Melissa M. Rand was involved in a collision with a vehicle owned by Tracy Augustyne. Crystal Laureano was a passenger in Rands vehicle. In two separate letters dated June 10, 1998, the respondents attorney provided notice to Preferred Mutual Insurance Company of their uninsured/underinsured claim under Rands policy. In a letter dated July 7, 1998, Preferred Mutual informed the respondents attorney to forward copies of any legal papers and also instructed the respondents to complete and return Notice of Intention to Make Claim forms. It is undisputed that the respondents never completed and returned these forms, nor did they forward copies of any legal papers.

In a letter dated October 27, 1998, Preferred Mutual informed the respondents attorney that in light of the fact that Allstate Insurance Company had admitted coverage of the Augustyne vehicle, it was denying coverage under the Supplementary Uninsured/Underinsurance Motorists endorsement as the limit of that policy was $25,000 per person and $50,000 per accident for SUM coverage, and Allstates policy must at least equal that amount.

The claimants commenced a personal injury lawsuit against Augustyne, however Allstate ultimately denied coverage based on non-permissive use. After a hearing on September 6, 2006, the court found that the operator of the Augustyne vehicle did not have permission to use it. In an order dated September 14, 2006, this court dismissed the action of Rand v. Augustyne based on a determination of non-permissive use.

On September 12, 2006, the respondents demanded arbitration of uninsured motorist benefits. Preferred Mutual commenced the instant proceeding to permanently stay arbitration on September 29, 2006.

In support of the application, Preferred Mutual contended that the arbitration must be permanently stayed because the demand was made beyond the statute of limitations.

The court wrote, Claims made under the uninsured motorist endorsement of automobile insurance policies are governed by the six-year statute of limitations applicable to contract actions (see, Matter of De Luca, 17 NY2d 76, 78 [1966]); Jenkins v. State Farm Ins. Co., 21 AD3d 529 [2d Dept. 2005]). The claim accrues either when the accident occurred or when the alleged offending vehicle thereafter becomes uninsured (see, Matter of Allstate Ins. Co. v. Giordano, 108 AD2d 910 [2d Dept. 1985], affd. on opinion below 66 NY2d 810 [1985]; Matter of Allstate Ins. Co. v. Torrales, 186 AD2d 647 [2d Dept.]). As the respondents demand was made more than six years after the accident date, they are required to come forward with legally sufficient proof that a later accrual date applies, and that they diligently sought to determine whether the offending vehicle was insured on the date of the accident (Matter of Allstate Insurance Co. v. Morrison, 267 AD2d 381 [2d Dept. 1999]).

Contrary to Preferred Mutuals contention, the respondents have established that the later accrual date of the courts determination that the Augustyne vehicle was driven without permission should apply. The record establishes that less than six months after the accident, the respondents ascertained that the offending vehicle was covered by an insurance policy issued by Allstate. Additionally, the respondents commenced an action against the alleged tortfeasor within the statute of limitations. Throughout the discovery phase of the litigation, Allstate did not disclaim liability or deny coverage, but instead chose to defend Augustyne. The question of non-permissive use was vigorously contested, requiring a hearing prior to trial. Not until the court determined that the Augustyne vehicle was driven without permission, did the offending vehicle become uninsured (see, Rowell v. Utica Mut. Ins. Co., 77 NY2d 636, 640 [1991]; Matter of Liberty Mutual Ins. Co., 271 AD2d 534 [2d Dept. 2000]).

In the alternative, Preferred Mutual asserts that it is entitled to deny coverage because the respondents breached a condition of coverage under the policy (see, New York Central Mutual Fire Ins. Co. v. Aguirre, 7 NY3d 772 [2006]; Matter of New York Central Mutual Fire Ins. Co. v. Gonzalez, 34 AD3d 816 [2d Dept. 2006]). Preferred Mutual alleges that the respondents should have completed and returned a sworn Notice of Intention to Make Claim form and should have provided copies of the legal papers concerning the personal injury action. This argument is flawed because Preferred Mutual denied coverage for underinsurance benefits in 1998. Once coverage was denied on that claim, there was no reason for the respondents to complete a Notice of Intention to Make Claim form or to provide the legal papers. Thus, the respondents cannot be said to have breached any condition of coverage under the policy.

The petition was dismissed and the case moves to UM arbitration.

Comment: The determination of whether an offending vehicle is uninsured can come about in several ways. Often there is a framed issue hearing, and the courts determination may wind up setting the date, thus starting the clock ticking. In this case, the offending vehicle did have insurance, but became uninsured the moment that Supreme Court determined that its use at the time of the accident was non-permissive. At that moment, the statute of limitations countdown began.

Matter of Preferred Mut. Ins. Co. v. Rand and Laureano, 2007 NY Slip Op 50625(U) (Supreme Court, Richmond County) (McMahon, J.)