Insurance cover is provided for claims made within the currency of the policy. Accordingly, policies contain clauses which stipulate that the claim must be notified to the insurer within a certain period of time. Typically, the insurer must be notified ‘as soon as practicable’ that circumstances have arisen which might give rise to a claim. Insurers are often a great deal less enthusiastic about accepting liability for claims than their policyholders may think reasonable and a challenge to a claim often involves the details of the policy. In particular, the validity of the notification given by the insured is often contested.
There have been two recent cases in which issues surrounding the validity of the notifications given by the insured were in point. In both cases the court agreed that the insurance cover sought by the insured was correctly denied by the insurer. In one case this was because the notifications were insufficiently clear and comprehensive (as well as in one instance, not prompt enough) and in the second case because the notices given did not relate to the defects in a construction project which were later discovered.
For a notification to be valid, the following requirements must be met:
- The notice must be given in writing and sent to each underwriter or authorised agent for the insurer;
- The notice must be given as soon as is practicable after the insured has become aware that a claim might be made;
- The claim must be clear and unambiguous, so that there is no reasonable room for doubt by the insurer that the purpose of the communication is to make it aware of the possibility of a claim; and
- The notice must include any circumstance of which the insured is aware that may give rise to a loss.
One of the key points is that the link between the notified circumstances must be ‘causal, not coincidental’. This means that a notice of a claim that is not sufficiently explicit or comprehensive to identify the actual source of the claim may well not be valid. For cover to be available, the claim must have arisen from the event which has been notified to the insurer.
Says <<CONTACT DETAILS>>, “Great care should be taken when preparing a notice to send to your insurers that a claim may be forthcoming. We can assist you to make sure that your legal rights are protected. Failure to give a valid notice normally means that the costs of a successful claim against you will be met by you, not your insurer.”
Partner Note
Kajima UK Engineering Ltd. v Underwriter Insurance Co Ltd., [2008] All ER (D) 194.
HLB Kidsons v Lloyd’s Underwriters subscribing to Lloyds Policy no 621/PKID00101 [2007] EWHC 1951[2008] All ER 769.