Notifying Your Texas Insurance Company Of A Claim

Whether you purchase your insurance policy in Dallas, Texas, or in Fort Worth, Arlington, Grand Prairie, Weatherford, or anywhere else in Texas, there is one thing you can count on. The policy of insurance that you purchase is going to require that you notify the insurance company “immediately” or “as soon as practicable” whenever there is an occurrence or an offense that may result in a claim. If you fail to do so, the one thing you can almost always count on is that the insurance company is going to deny your claim for benefits.

What if your failure to timely notify your insurance company of the claim or occurrence results in no harm to the insurance company? You still violated a policy provision by not notifying the company in the time frame in which the policy requires you to notify them. Do you lose? Is your claim for benefits lost?

This issue was addressed in the case PAJ, Inc. v. Hanover Ins. Co. This was a Texas Supreme Court decision. The issue for the court to decide was whether a policy holder who failed to timely notify its insurance company of a claim defeats coverage under the policy if the insurance company was not prejudiced by the delay. Prejudiced meaning, the insurance company suffered no real harm or loss due to the delay in being notified of the claim.

In PAJ, the policy contained a prompt-notice provision that required PAJ to notify Hanover of an occurrence or an offense that may result in a claim “as soon as practicable”. The claim was a type that PAJ did not believe was covered by the policy and because of that belief did not notify Hanover. It was not until about six months after a lawsuit had been filed that PAJ learned that the Hanover policy would cover PAJ. Hanover denied the claim for PAJ’s failure to timely notify Hanover. In other words, Hanover said that PAJ broke its contract with Hanover by not notifying them in the time frame specified in the insurance contract.

The issue for the court here was: Was this breach of the contract (insurance policy) material or in other words did this failure to comply with the policy terms cause real harm to Hanover? The supreme court concluded that there was no real or material harm to Hanover and thus PAJ’s failure to timely notify Hanover of the claim did not defeat coverage.

For Hanover to have prevailed in this matter, Hanover would have had to convince the court that they were harmed by the delay in notifying them and in this case, they were unable to show any harm. This case serves as another example why a person needs to have an experienced Insurance Law Attorney review and look at these cases involving insurance companies any time they deny a claim for benefits.