**Author's Note: If you have reached this blog through a list that carries advertising, your computer may or may not be put at risk either through the list or through the advertising. I do not accept or authorize any commercial advertising of any kind on any list or post. Placing commercial advertisements with or near any of my web log posts is prohibited. Further, I do not recommend any products or services advertised with or near any of my posts or any list of my posts.**
This is the beginning of a series of posts on Presenting Insurance Claims. The series begins with issues related to making Insurance Claims under Property and other First-Party Insurance Policies. This post is a very recent update of a Section from my Chapter on "Claim Handling Issues," in "CAT Claims: Insurance Coverage for Natural and Man-Made Disasters" (West Publishing Company)(COPYRIGHTED. ALL RIGHTS RESERVED, NO REPRODUCTION OR ANY OTHER USE OF THIS MATERIAL MAY BE MADE FOR COMMERCIAL PURPOSES.):
Asterisks (***) indicate material omitted for ease of reference:
CAT Claims: Insurance Coverage for Natural and Man-Made Disasters
Database updated November 2009--UPDATED FEBRUARY 2010
John K. DiMugno, Steven Plitt, Dennis J. Wall
Chapter
2. Claim Handling Issues
by Dennis J. Wall, Esquire
COPYRIGHTED MATERIAL. NO USE OR REPUBLICATION OF THIS MATERIAL MAY BE MADE IN ANY FORM AND IN ANY MEDIUM WITHOUT WRITTEN ADVANCE PERMISSION. ALL RIGHTS RESERVED.
§ 2:3.Notice as condition precedent, or not, to first-party property insurance coverage
* * *
Notice to the property insurance company is a condition to obtaining coverage for a particular loss under most, if not all, property insurance policies. It is a clear lesson from reviewing the decided cases that prompt notice in the eyes of the judge is essential to presenting a potentially successful claim to coverage.[1] Successful policyholders have provided notice of loss in the reported case law within 10 days of Hurricane Katrina,[2] as just one example. There are many insurance coverage questions involved in catastrophe and other large claims. Whenever possible, notice to the insurance company of the loss should not be one of those issues.[3]
In the language used by lawyers and by courts, notice of loss is a condition precedent to coverage under a first-party policy of insurance.[4] In a case often cited for this proposition, it has been written that the purposes of a provision for notice of loss include overtones connected with prompt investigation by the insurance company and its setting of a proper reserve[5] for the particular claim:
An insurance company is entitled to require notice at the earliest time practicable after a loss has occurred. Prompt notice permits the insurer to investigate the facts on which the claim is predicated and to adjust its books in order to maintain a proper reserve fund in light of the insured's claim.[6]
“As a general rule,” notice of loss provisions “are liberally construed” in favor of the policyholder who is required to provide the notice.[7] Often, a notice of loss provision requires the policyholder to notify the insurance company of a loss as soon as practicable, which has been interpreted by the courts to mean “that notice had to be given within a reasonable time of [i.e., after] the discovery of loss.”[8]
* * *
[FN1]See Townhouses of Highland Beach Condominium Ass'n v. QBE Ins. Corp., 504 F. Supp. 2d 1307, 1309 (S.D. Fla. 2007): “On or about October 24, 2005, Hurricane Wilma struck
The Townhouses Court also determined that Florida would allow a cause of action which Florida State Courts had never previously allowed, namely, a cause of action or claim for breach of an implied warranty of Good Faith and Fair Dealing at Common Law, separate and apart from the Statutory Claim for First-Party Bad Faith made available under Florida Statute Section 624.155. Later decisions even in the same Southern District of Florida have held that this is plain wrong: "The Court has considered the cases cited by Plaintiff and determined that those cases incorrectly applied
[FN2]
[FN3]See National Athletic Sportswear, Inc. v. Westfield Ins. Co., 2007 WL 3286858 *3 (N.D. Ind. Nov. 5, 2007), aff'd & opinion adopted, 528 F.3d 508 (7th Cir. 2008): “The Plaintiff reported the theft and loss of property to Defendant on a timely basis.” In this case, the insurance company prevailed on all issues because the policyholder was held by the Indiana Federal Court to breach the insurance policy by refusing to submit to an examination under oath purportedly required by the policy. National Athletic Sportswear, Inc. v. Westfield Ins. Co., 2007 WL 3286858 *6–*12 (N.D. Ind. 2007), aff'd & opinion adopted, 528 F.3d 508 (7th Cir. 2008). First-party property insurance policy requirements for examinations under oath are discussed in § 2:5, infra.
[FN4]E.g., Kenneth v. Nationwide Mut. Fire Ins. Co., 2007 WL 3533887 *6 (W.D. N.Y. 2007) (homeowners insurance policy); seeUtica Mut. Ins. Co. v. Fireman's Fund Ins. Companies, 748 F.2d 118, 121 (2d Cir. 1984) (case involved
[FN5] For an in-depth discussion of the role played by reserves in the handling of first-party property insurance claims, see§ 2:11, infra.
[FN6]Utica Mut. Ins. Co. v. Fireman's Fund Ins. Companies, 748 F.2d 118, 121 (2d Cir. 1984) (case involved a fidelity bond and
[FN7]Della Porta v. Hartford Fire Ins. Co., 118 A.D.2d 1045, 1047, 500 N.Y.S.2d 831, 832 (App. Div. 3d Dep't. 1986) (case involved notice of a burglary).
[FN8]Della Porta v. Hartford Fire Ins. Co., 118 A.D.2d 1045, 1047, 500 N.Y.S.2d 831, 832 (App. Div. 3d Dep't. 1986).
© 2010 Thomson Reuters UPDATED.
Comments