In Deja Realty Corp. v. Travelers Indemnity Company of America, 2026 WL 683303 (S.D.N.Y. 2026), the United States District Court for the Southern District of New York granted summary judgment to the insurer, holding that the insured’s year-long delay in providing notice of property damage violated the policy’s condition precedent requiring “prompt notice.” Because New York law does not impose a prejudice requirement in the context of first party property policies, the Court concluded that the insurer’s coverage obligations were extinguished as a matter of law.
The Court also rejected the insured’s argument that the insurer waived the late notice defense by failing to expressly raise it in its initial denial letter. Although the disclaimer focused on certain policy exclusions, the letter also quoted the policy’s notice condition and reserved all rights, language the Court deemed sufficient to preserve a late notice defense.
Facts
The insurer issued a commercial insurance policy to the insured which policy covered direct physical loss of or damage to covered property, but only when caused by a covered cause of loss. It contained several exclusions, including for earth movement, wear and tear, deterioration, latent defect, and settling or cracking. The policy required the insured to give the insurer “prompt notice” of any loss or damage and to describe how, when, and where the damage occurred “[a]s soon as possible.”
The insured discovered problems in September 2021 when a tenant reported that the front door of the building at the premises would not open. The insured attributed the issue to the rock excavation at a neighboring construction site, and alleged that the excavation caused structural damage to its building.
Despite suing the neighboring realty and construction companies in December 2021, the insured did not notify the insurer of the loss until September 28, 2022. The insurer inspected the next day and denied the claim based on the earth movement exclusion.
Analysis
a. Late Notice as a Condition Precedent
The policy required the insured to provide “prompt notice of the loss or damage” and “[a]s soon as possible, give [the insurer] a de-scription (sic) of how, when and where the loss or damage occurred.” The Court held that the insured knew of the damage no later than September 2021 but waited until September 2022 to report it, a delay that was unreasonable as a matter of law.
The Court emphasized that New York does not require insurers to show prejudice in the first party property context. In response to the insured’s argument that Insurance Law Section 3420 should apply, the Court noted that Section 3420’s prejudice requirement applies only to liability policies. As a result, the delay, alone, was enough to deny coverage under the policy.
b. No Waiver of the Late Notice Defense
The insured also argued that the insurer waived the late notice defense because the denial letter focused on exclusions rather than timeliness. The Court disagreed.
Although the denial letter primarily quoted the earth movement exclusion, it also reproduced the Property Loss Conditions section which contained the prompt notice requirement. The letter further contained a reservation of rights noting that the insurer did not waive any rights and reserved all grounds for denying coverage under the policy or at law.
The Court concluded that this broad reservation language preserved the late notice defense and distinguished cases in which insurers omitted any reference to the notice provision.
The Court found that, given the unreasonable delay and preserved defense, coverage was barred as a matter of law.
Conclusion
Deja Realty makes clear that undisputed damage cannot overcome an insured’s failure to give timely notice. By waiting roughly a year to report the loss, the insured was not entitled to coverage because New York law treats notice requirements as a prerequisite to coverage, regardless of prejudice. The case stands as a cautionary example that timely claim reporting is critical.