The New Jersey high court’s ruling Thursday that National Union doesn’t have to show it was harmed by a policyholder’s late notice of a lawsuit in order to deny coverage sends a “warning call” to insureds to carefully comply with their policies’ notice provisions, but attorneys say the decision’s reach could be limited because the case involved a sophisticated corporate policyholder.
In view of the New Jersey Supreme Court’s ruling, companies with claims-made policies should take extra care to provide notice to their insurers anytime they become aware of a claim or potential claim, according to attorneys.
“Policyholders now have to be vigilant and maybe overinclusive in giving notice in some expeditious way due to the scrutiny they may face,” said Sherilyn Pastor, leader of McCarter & English LLP’s insurance coverage group. “Notice issues can be a tough thing — there can be confusion about what triggers a policy and what is a claim under a policy.”
The New Jersey Supreme Court appeared to take issue with the fact that the plaintiffs presented no evidence as to why First Independent delayed in giving notice to National Union. A policyholder in a similar situation “would be wise to offer proof regarding timing, delay, and what it understood to be ‘as soon as practicable,'” according to Pastor.
“If this policyholder had presented evidence or justification for why its notice was as soon as practicable in its circumstance, it may have gotten past summary judgment and at least had a fact finder make a determination about whether there was an inordinate delay or the delay was justified,” Pastor said.