Over the years, we have often reminded insureds of the importance of promptly placing their insurance carrier on notice of new claims. Based on recent case law, defense counsel are advised to raise the issue of available insurance with their clients when counsel are retained to defend a new claim.
In many insurance policies, timely notice is a condition precedent to coverage. Thus, the failure to provide timely notice can, in some cases, result in a loss of the right to insurance. Many states, including New York, have acted to reduce the impact of such policy conditions, by imposing a prejudice requirement and forcing the insurer to demonstrate that the late notice caused prejudice before permitting the insurer to deny coverage. But even so, there remain many other reasons that providing prompt notice of claim is important. For example, a carrier’s obligation to pay defense costs is typically not triggered until after tender, so defense costs incurred before notice are unlikely to be covered. In addition, the claims process, and payment of defense costs, is more likely to go smoothly if the carrier is kept apprised of the status of the litigation and the defense strategy.
