Exception to 'No Prejudice' Rule Not Applicable to Indemnity Club Certificate, 2nd Cir. Affirms

NEW YORK — A member of a non-profit mutual insurance association may not avoid application of New York's "no prejudice" rule to a dispute over coverage for a $3.7 million plaintiff's verdict because the insurance contract was not a reinsurance agreement, a federal appeals court has affirmed.

The 2nd Circuit U.S. Court of Appeals upheld the lower court’s ruling that the contract at issue does not fall within the exception to the “no prejudice” rule set forth in Unigard Sec. Ins. Co. v. North River Ins. Co. (79 N.Y.2d 576, 594 N.E.2d 571, 584 N.Y.S.2d 290 [1992]).

In March …