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Jonathan A. Dachs Jonathan A. Dachs

It is well-established, and well-known, that upon receipt of a properly served Demand for Arbitration or Notice of Intention to Arbitrate, the insurer must promptly determine whether or not, in its view, the claim presented is valid and meritorious. If the insurer answers this question in the affirmative, it will allow the claim to proceed to arbitration in accordance with the arbitration provisions of its applicable endorsement. If, on the other hand, the insurer determines that the claimant presents preliminary issues that should be resolved prior to arbitration, it must move in court to stay the arbitration, either permanently, or temporarily, pending a determination of those preliminary, or threshold, issues. The failure of the insured to make a timely motion to stay arbitration—i.e., within 20 days after receipt of the Demand for Arbitration or Notice of Intention to Arbitrate, pursuant to CPLR 7503(c)—will result in a preclusion of the right to have the arbitration stayed while the court determines the preliminary issues, and a waiver of the right to stay arbitration upon any such issue or ground. (A waiver of the preliminary issues has been held to be the equivalent of a determination that the insured claimant has complied with the policy and that he or she was, in fact, involved in an accident with an uninsured (or underinsured) motorist. Aetna Life & Cas. Co. v. Stekardis, 34 N.Y.2d 182 (1974). See Steck v. State Farm Ins. Co., 89 N.Y.2d 1082 (1996).) Somewhat less familiar to practitioners is the notion that a failure timely to seek a stay of arbitration is not the only way that an insurer may waive that right.

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