We’re kicking off our top ten list with what is perhaps the most fundamental and important coverage issue, notice. Too often, we see corporate policyholders forfeit or seriously jeopardize valid claims, worth millions of dollars, simply because they fail to give notice in a timely fashion. In this video, Brian Friel discusses some of the basics of notice, and how difficult it can be to get notice right.
While the general concept of providing timely notice is simple enough, this is a very complex area of law. Although notice provisions can be confusing and hard to find, even when read, they don’t always lead policyholders to a clear cut answer as to what should be done. In addition, notice-related provisions can be found in different parts of the policy. This can cause misinformation as to impact of providing notice unless all notice-related provisions are spotted and analyzed as a whole. Sometimes, provisions relating to notice found in an insurance policy tower are inconsistent, leading to further confusion. Finally, ever-changing court decisions across the country addressing what constitutes a claim for purposes of triggering notice make it difficult to apply clear cut black and white rules regarding notice. Sometimes, the only solution is to know the case law, and to provide notice according to applicable law.
Notice provisions should be strictly followed. As cases have repeatedly demonstrated, one week late, or even a day late, in certain situations under a claims-made policy (such as a typical D&O or E&O policy) can mean the difference between obtaining a $10 million insurance recovery or zero dollars, regardless of the substantive merits of the claim.
In today’s video, Brian discusses a recent case demonstrating how the failure to provide timely notice resulted in a disastrous outcome for the policyholder. There, a hospital failed to review and/or understand the differences between notice provisions in its primary insurance policy and its excess insurance policy. The hospital provided timely notice under its primary policy but notice was late under its excess policy, which resulted in a complete forfeiture of $10 million in excess coverage.
Our goal for this series is to help businesses. and the non-insurance lawyers who represent those businesses, understand some of the insurance traps that others have fallen into. Lawyers who understand these issues can then make better decisions regarding when it makes sense to bring in separate insurance recovery counsel.
To see the whole series, check out Top Ten Insurance Recovery Issues For Non-Insurance Lawyers.