Failure to Provide Timely Notice Can Invalidate Your Insurance Claim

Most commercial liability insurance contracts require claimants to provide a notice of claim to the insurer within a specified period of time. The failure to do so can prove fatal to your ability to obtain coverage.

In The Travelers Indemnity Company v. Orange And Rockland Utilities, Inc., the Supreme Court of New York recently ruled that The Travelers Indemnity Company was not obligated to provide coverage for pollution remediation at several manufactured gas plants owned by Orange and Rockland Utilities, Inc. (ORU) because the company waited too long to file its claim.

ORU first notified Travelers of potential environmental liabilities in 1994. However, the insurance company maintained that ORU was sufficiently aware of its potential liability at the sites as early as 1981. Travelers introduced ongoing correspondence between ORU and environmental regulators, other insurers and outside consultants to substantiate its claim that ORU provided untimely notice.

Under New York law, an insured is required to provide notice after becoming aware of a reasonable possibility that the policy will be implicated. Compliance with the notice provisions of a liability insurance policy is a condition precedent to coverage, which means that a failure to comply terminates the insurer’s obligation to provide coverage. In this case, the court agreed that ORU failed to satisfy the requirement of timely notice without offering a valid excuse, pointing to regulatory contacts and internal reports predating the insurance claim by several years.

As this case highlights, it is imperative to follow the claim reporting rules detailed in your policy. Basic tips for ensuring compliance include:

  • Understanding your reporting provisions before a claim arises
  • Reporting all claims and potential claims immediately
  • Keeping detailed documentation of all correspondence with your broker and insurer

For additional information about filing a proper and timely notice of claim, contact a skilled New York insurance attorney at Michael Sepe, LLC.