Third-party liability insurance policies, whether a standard form CGL policy or a manuscript specialty policy, share common conditions that an insured should remain cognizant of through the claim process to ensure that coverage is not jeopardized. The conditions section of these policies delineates the obligations that must be fulfilled for the contract of insurance to be enforced. While there are conditions obligating both the insurer and the insured, the more common conditions which, if ignored or unknown, can result in the creation of needless coverage hurdles for insureds, are: providing timely notice and reporting of a claim; cooperating with an insurer; and avoiding the assumption of liability. This article briefly discusses these policy conditions, which may not be well known to insureds, so that a coverage assessment is limited to the merits of a claim and not a failure to satisfy policy conditions.

Notice and Reporting Requirements

Notice and reporting requirements across most policies are similar in that they require an insured to provide notice and/or report a claim “as soon as practicable” or in a similar immediate manner to be considered timely. The upshot being that sitting on a known or on a suspected claim is never a good idea. The purpose of the reporting condition is to provide a carrier notice of a claim allowing for an opportunity to investigate the claim as soon as possible and thereby to collect as much information when it most readily available resulting in an accurate coverage analysis. Additionally, in instances where an insurer is obligated to provide a defense, the sooner notice of a claim is received the sooner an insurer can defend its insured against potential liability. Although the duty to timely report a claim to a carrier is important, regardless of the nature of the subject policy, the importance of this duty differs depending on whether the policy is an occurrence-based policy or a claims-made policy.