Estee Lauder Decision Highlights Waiver Argument's Challenges

Policyholders often seek to challenge an insurer's denial of coverage on the grounds that the insurer waived a defense relied upon to deny coverage. On September 15, 2016, the Court of Appeals in Estee Lauder Inc. v. OneBeacon Ins. Group, LLC, 2016 N.Y. LEXIS 2788 (2016) reaffirmed that a waiver argument can be a challenging one to make because it requires a fact-intensive inquiry regarding whether the insurer actually intended to waive a coverage defense.

By way of background, Estee Lauder initiated this coverage action in 2005, claiming that OneBeacon wrongfully denied defense and indemnity costs in connection with environmental pollution claims asserted against Estee Lauder. Importantly, when the claim was noticed, OneBeacon reserved the right to deny coverage based upon late notice in 1999, but in a series of letters issued in 2002, the insurer did not reference its late notice defense.