In a recent decision by the United States Court of Appeals for the First Circuit, it was declared that no insurance coverage was available for a lawsuit as the insured party did not provide timely notice to the insurer. This ruling is noteworthy for legal professionals working with commercial clients who have adopted successive claims-made policies. It serves as a reminder of the importance of complying with notification deadlines specified in insurance contracts.
As outlined by the court, the insured party held successive claims-made policies with the same insurer. These agreements stipulated that the insurer was to be given written notice of any claim ‘as soon as practicable.’ However, this was not to exceed ninety days ‘after the expiration date’ of the policy.More info on the ruling here.
This case enforces the strict adherence to the policy rules and conditions laid down by insurers. It indicates that, irrespective of how long the insured has held policies with the insurer, a breech in contract terms around notification could lead to denial of coverage for claims. It is therefore essential for legal teams working with corporate clients to ensure that they are informing their clients about the importance of adhering strictly to policy terms for notifying claims in a timely manner.
While the specifics of this First Circuit decision may be unique to Massachusetts law, the harsh consequences of failing to give timely notice are likely applicable in other jurisdictions. Legal experts should therefore consider this ruling when advising on insurance contracts and risk management for their multinational corporate clients.