If faced with an insurance claim, reporting it to insurers is one of the major provisions of an insurance policy. Failing to do so within a specific time may give your insurer grounds to refuse to cover the claim due to late notification.
For many businesses and organisations, the most typical types of policy which they take out are Employers’ Liability Insurance and Public Liability Insurance. The latter covers the costs of claims made by the public, following for example, an accident at the insured’s premises.
If your insurer has refused indemnity for whatever reason and there is no prospect of reversing their decision, you will need to take action to deal with the claim against you.
Why obtain Legal Advice?
There may be strict time limits, both under your policy and in respect of legal proceedings, which you must comply with and this is when you need to seek legal advice. Leaving matters and not taking any action may well jeopardise your prospects of defending the claim or raising arguments to reduce any damages or legal costs which you may be ordered to pay later on.
At Rix & Kay, we have considerable experience in defending both insured and uninsured liability claims and protecting clients’ interests at a time when they find themselves exposed to significant financial and reputational risks.
Avoiding a Claim
To ensure that your insurer indemnifies you against a claim, you must satisfy the contractual provisions under the terms of your insurance policy. These will include notifying the insurer of any relevant claim made against you under the policy. An insurer will be liable to pay a proven claim, unless they can argue a valid defence, such as:
- The loss is excluded under the policy.
- The insured failed to disclose material facts when the insurance contract was entered into.
- The insured failed to comply with conditions in the policy requiring the claim to be notified within a specified period of time.
A breach of a condition by the insured gives the insurer a potential right to refuse indemnity or even to void the policy from its start.
Impact of late notification
Notice must be given within the time specified in the insurance contract. Most insurance policies require written notice to be given within a certain time from:
- The date of the incident which may give rise to a claim.
- The date when any legal proceedings are commenced.
If the contract is silent on this, notice must be given within a reasonable time from the occurrence of the loss or incident. If there is any ambiguity within the wording of the policy, it is resolved in favour of the insured.
Insurers may seize upon late notification of a claim by arguing a breach of the insurance contract. If indemnity is withdrawn, the insurer may not cover the loss being claimed or the legal costs associated with it. The Courts have tended to take a strict view of non-compliance as being sufficient grounds for an insurer to deny liability for the claim in its entirety, even where there has been no prejudice resulting from the late notification.
Policies have varying conditions as to their reporting requirements. The precise conditions of each individual policy need to be considered carefully, as their interpretation is essential when reviewing an insured’s duty to the insurer and the steps available to an insurer to refuse cover. Even slightly different wording can have a fundamentally different effect.
At Rix & Kay, we are experienced in acting for clients who are effectively uninsured for the purposes of a claim. Initially, we will review the insurance policy to assess whether the insurer has sufficient grounds to avoid the policy and withdraw indemnity and if so, we will then advise you as to the most pragmatic and commercial approach to take in order to limit your exposure to lengthy and expensive litigation. In some cases, there maybe an arguable defence making the claim worth fighting, especially if it appears to be fraudulent. In others, the only approach may be one of damage limitation, where we would recommend taking a commercial view and resolving the claim as quickly as possible.
It is important that with any potential claim:
- You notify your insurer as soon as the event occurs to enable your insurer to have sufficient time in which to investigate any potential claim and to gather evidence which it can use to defend the claim if brought in the future. If the insurer is not notified, their position may be prejudiced later on.
- You should always keep full records of all documents sent to your insurers and any receipts confirming that they have received fees. It may be that this is done through your insurance brokers.
- You should always review the terms of your insurance policy to note any exclusions, identifying areas which are not covered as well as all other conditions and reporting requirements. You do not want to run the risk of your insurers withdrawing cover when you most need it.