Due to "draconian" state laws, New Yorkers whose concerns for loved ones caused a delay in filing insurance claims after the Sept. 11, 2001, terrorist attacks on the World Trade Center could have caused their insurance coverage to be forfeited.

According to William Passannante, a partner at Anderson Kill & Olick and co-chair of the law firm's insurance practices group, even delays as minor as one day in filing an insurance claim could allow insurance companies to deny claims stemming from the terrorist attacks — unless the state legislature enacts extensions.

Insurance policyholders are required to notify their insurers of a property/casualty claim in exactly the time and manner put forward in their insurance policies. For example, policyholders might be required to notify their insurers of a loss "immediately" or to file proof of damage within 30 days. In New York there is a substantial body of case law that says any violation of those provisions could void the insurance claim, even if the delay doesn't increase the cost of the claim, says Passannante.

"The notion that anyone would need notice of the Trade Center attacks is laughable, but it doesn't matter," says Passannante. "Insurance companies need the notice as set out in the policy, or the coverage is potentially forfeited."

Passannante has petitioned the chairpersons of the insurance committees of both houses of the New York Legislature to declare that notice has been given in all World Trade Center-related losses, and to extend insurance policyholders a period of at least 180 days from Sept. 11 to provide insurers with proof of a loss.

In addition to extending a grace period for victims of the tragedies, Passannante hopes that his petition will lead New York legislators to reform the state's "harsh" rules on providing notice to insurance companies.

"New York's notice law is anachronistic," says Passannante. "In almost every other state the courts will ask if a delay in providing notice caused any harm, and if there is no harm then the fact that the notice is technically given late won't negate the policy."

Representatives for the legislators addressed by Passannante's letter and the New York Insurance Department declined to comment on the proposed changes.