The courts have recognized that a distinction is to be drawn between the denial of coverage based upon noncoverage and a denial based upon an exclusion from coverage. In the former situation, the claim is not within the policy and, therefore, no notice of disclaimer is required, because mandating coverage on the basis of an insurer’s failure to serve a timely notice of disclaimer would be to create coverage where none previously existed. In the latter situation, the policy covers the claim but for the applicability of the exclusion and, therefore, a notice of disclaimer is required.
The Court of Appeals has recognized that “drawing the line between a lack of coverage in the first instance (requiring no disclaimer) and a lack of coverage based on an exclusion (requiring timely disclaimer) has at times proved problematic.” Worcester Ins. Co. v. Bettenhauser, 95 NY2d 185 (2000).
‘Schiff’
