Lang v. Hanover Ins. Co

In Lang v. Hanover Ins. Co., (3 NY3d 350 [2004]) the Court of Appeals explained that under common law, an injured person has no common-law right to sue the insurer of a tortfeasor, because of lack of privity of contract. It further explained, that the Legislature sought to ameliorate the hardship caused when an injured party obtained a judgment against a tortfeasor but the insured failed to satisfy the judgment, by enacting a limited statutory cause of action on behalf of injured parties directly against insurers, now codified at Insurance Law 3420 (b) (1). That statute authorizes "any person who ... has obtained a judgment against the insured ... for damages for injury sustained or loss or damage occasioned during the life of the policy or contract" to bring an action against the insurance company if the judgment has not been paid within 30 days. Thus, compliance with the requirements of Insurance Law 3420 (b) (1), including obtaining a judgment against the tortfeasor, is a condition precedent for a lawsuit against the insurer. In Lang, the Court of Appeals stated that "[t]here is no dispute that parties to an insurance contract--the issuer, a named insured or a person claiming to be an insured under the policy--may bring a declaratory judgment action against each other when an actual controversy develops concerning the extent of coverage, the duty to defend, or other issues arising from the insurance contract" (3 NY3d at 353).