A New York court has ordered Kookmin Best Insurance to cover defense costs, despite receiving notice more than three years after the underlying personal injury suit began.
In a decision handed down July 24, the Appellate Division of the New York Supreme Court, First Department, reversed a lower court ruling and held that Kookmin Best Insurance Co. Ltd (US Branch) must defend and indemnify Wesco Insurance Company in a personal injury lawsuit involving their respective insureds – a commercial building owner and a tenant.
The case centers on a slip-and-fall lawsuit that named the building owner, insured by Wesco, and the tenant, insured by Kookmin. Wesco took on the defense for both parties and later sought reimbursement from Kookmin, arguing that Kookmin’s policy should provide primary coverage under the terms of the lease agreement between the two businesses.
Kookmin pushed back, pointing to a three-year delay in receiving notice of the lawsuit. A lower court agreed and dismissed Wesco’s claims. But the appellate panel saw it differently.
The court ruled that Kookmin couldn’t show it had been harmed by the late notice. Wesco, the judges noted, had acted quickly to defend the case, shared its investigation, and was ready to coordinate. Without real proof of prejudice, the delay alone wasn’t enough to deny coverage.
The decision also tackled how insurance responsibilities are split in commercial leases. While the lease didn’t clearly say whether the tenant’s insurance should be primary or excess, the court relied on long-standing New York precedent to resolve the issue. If a lease requires a tenant to name a landlord as an additional insured, that coverage is presumed to be primary unless stated otherwise.
This principle, taken from the Court of Appeals’ decision in Pecker Iron Works v. Travelers, tipped the scale in Wesco’s favor. The appellate court held that Kookmin’s policy must respond first, despite the language in its policy suggesting otherwise.
As a result, Wesco is entitled to recover its legal defense costs from Kookmin and secured a declaration that Kookmin is responsible for both defense and indemnification on a primary basis moving forward.
For insurers operating in commercial real estate or managing layered coverage arrangements, the decision is a reminder that the lease agreement – not just the policy wording – can determine how coverage duties stack up.
The case has been sent back to the lower court for further proceedings. While not yet final, the ruling sets a strong precedent for delayed notice and inter-insurer obligations in New York’s commercial liability landscape.
