Giving Prompt Notice Of Claims

Insurance lawyers know that almost all insurance policies require that an insured provide to the insurance company, prompt notice of a claim.  The purpose of this prompt notice requirement is to allow the insurance company to investigate the claim while the facts of the claim are fresh.  However, if the insured fails to provide this prompt notice, the insurer is required to show that it was prejudiced or harmed by the insured’s failure to provide the prompt notice.  Here is a case discussing that issue.

The case is from the Fifth Circuit Court of Appeals and is styled, Blanco Properties, L.L.C. v. Arch Specialty Insurance Company.

Blanco owed commercial property insured by Arch.  Blanco’s owner did not discover April 2016, hail damage until October 2017 and did not file a claim until November 2017.  The claim was denied due to the policy containing a specific endorsement that explicitly required hail related claims to be brought within one year.  The District Court granted summary judgement in favor of Arch and this Court affirmed that judgment.

Blanco contends that Arch must show prejudice by an insured’s failure to file a claim within the express reporting period specified by an endorsement to the insurance contract before it can deny coverage for the claim.

Arch’s policy covered windstorm and hail damage “subject to all the terms of this Policy.”  The policy originally stated the insured was to provide “prompt notice” of any losses, but the Windstorm or Hail Loss Conditions Amendment was an endorsement that provided “THIS ENDORSEMENT CHANGES THE POLICY, PLEASE READ IT CAREFULLY.”  Stating that this was “agreed,” the amended policy language stated: “In addition to your obligation to provide us with prompt notice of loss or damage, with respect to any claim wherein notice of the claim is reported to us more than one year after the reported date of loss or damage, this policy shall not provide coverage for such claims.”

The Endorsement in this policy states it will not provide coverage for claims that are reported to Arch more than one year after the date of loss or damage.  This is different from policies requiring “prompt notice” or notice “as soon as practicable.”  The Endorsement’s one year notice provision establishes a specific deadline for notice.  This is a significant distinction between the notice provisions in the Endorsement and the general “prompt” or “as soon as practicable” notice provisions in other policies.