In re the Arbitration between State Farm Mutual Automobile Insurance & Tremaine

—Order unanimously reversed on the law without costs and application granted. Memorandum: Respondent, a passenger in a motor vehicle owned by the State of New York (State), was involved in an accident on July 11, 1994. She served notice of an *963underinsurance claim on petitioner, her insurer, 2V2 years later, in December 1996. Respondent thereafter filed an uninsured claim under the State insurance policy and, after settling with the State for its policy limit, served a demand for arbitration of her underinsurance claim on petitioner. Supreme Court erred in denying the application to stay…