New Appleman on Insurance: Current Critical Issues in Insurance Law – Featured Article from the Summer 2009 issue– Recent Developments in Insurance Law on Notice
The Summer, 2009 issue of New Appleman on Insurance: Current Critical Issues in Insurance Law features an article, “Recent Developments in Insurance Law on Notice: The Continuing Trend Toward Requiring Prejudice,” by Brian Myers, Jennifer McAdam & Benjamin Hassebrock of Lathrop & Gage. It addresses recent developments in the law regarding the defense of late notice.
When a policyholder fails to notify its insurer in a timely manner of an event that may trigger the insurer’s duty to defend or indemnify, the insurer may assert a coverage defense of late notice. Because courts and legislatures around the country have adopted varying approaches to the late notice defense, it is imperative for coverage counsel and other claim professionals to know the applicable law when addressing this issue. The vast majority of states currently require that the insurer suffer prejudice as a result of its policyholder’s late notice before that defense will act as a bar to coverage. Recent legislation and court decisions demonstrate that the decades-old trend toward this majority position is continuing.
In 2008, New York embraced the majority rule by adopting a statute requiring insurers to prove prejudice by a policyholder’s late notice. Moreover, courts in other states in the past few years have issued decisions that affirm and clarify the notice-prejudice rule. This article highlights the 2008 New York legislation and recent decisions from several jurisdictions concerning the late notice defense.