Order, Supreme Court, New York County (Beverly Cohen, J.), entered April 4, 1991, which granted the motion of defendant Holmes Protection of New York, Inc., to vacate a default judgment on condition that its attorneys pay plaintiff $1,500, unanimously modified, on the law, the facts and in the exercise of discretion, to increase the amount to which plaintiff is entitled to $3,000, and otherwise affirmed, without costs.
In light of the strong policy favoring the determination of actions on their merits (Scott v Allstate Ins. Co., 124 AD2d 481, 484), we find no abuse of discretion in vacatur of the within default judgment upon defendant-respondent’s showing of an unintentional failure by defendant-respondent’s insurer to defend the action, lack of prejudice to plaintiff, and the existence of a potentially meritorious defense (Massachusetts Bay Ins. Co. v Guardian Escrow Corp., 171 AD2d 615, 616). We agree with the IAS court that, as a condition to the vacatur of *368the default, plaintiff should be compensated for the inconvenience caused by defendant-respondent’s insurer’s egregious inefficiency (see, Aces Mech. Corp. v Cohen Bros. Realty & Constr. Corp., 99 AD2d 455). Moreover, under the circumstances of this case, we find that, in order to adequately compensate plaintiff, the amount should be raised to $3,000. Concur — Ellerin, J. P., Kupferman, Asch and Kassal, JJ.