In the wake of an incident, once you’ve identified and located potentially applicable insurance policies, the next step is to provide notice to each of the potentially responsible insurance companies.
The notice requirement usually is expressly set forth in the policy. In a commercial general liability (CGL) policy, it usually is in a section that identifies the “Conditions” for coverage. Here is a typical provision:
Duties in the Event of Occurrence, Offense, Claim or Suit:
a. You must see to it that we are notified as soon as practicable of an “occurrence” or an offense which may result in a claim.
Timely notice is absolutely essential — failure to provide timely notice may result in loss of coverage. Moreover, the insurance company’s duty to defend you does not arise until the company actually receives notice.
What does “as soon as practicable” mean?
Generally, courts have held that the insured must give notice as soon as it’s reasonable in light of all the circumstances. We always tell clients the sooner, the better.
How should you give notice?
It should be in writing (e.g. a letter) and sent via certified mail or Federal Express, so there is a record of receipt. You should also request that the recipient confirm receipt of the notice, in writing.
Who should you give the notice to?
Usually the address and name of the company are specified in the policy. Notice given to the broker usually is not sufficient, and notice to the agent may not be sufficient, either. Contact the broker or agent if you are uncertain about where to direct the notice.
What should you include in the notice?
If you have been served with a lawsuit, include the complaint. Otherwise, provide the details: what happened, when, and the names/addresses of any injured parties or property. The policy may also require other information to be included in the notice.
As mentioned earlier, the consequences of late notice can be severe. North Carolina courts use a 3 part test when an insurance company alleges late notice as a defense to coverage:
- Was notice given as soon as practicable, or was there a delay?
- If notice was not given as soon as practicable, was the delay in good faith?
- If the delay was in good faitih, was the insurance company prejudiced (harmed) by the delay?
In sum, once you’ve identified your potentially applicable policies, provide notice to the insurance companies as soon as you can. We can help you with this task and other insurance claim related matters.