Readers know that it doesn’t take much to get me up on my hobby horse about insurers trying to deny coverage based on the late provision of notice. In general, I am against a mere procedural fault causing a complete coverage forfeiture. Every now and then though there is a case where the policyholder’s lack of diligence makes the case against the insurer’s coverage defense very tough.  A recent decision out of the District of Minnesota provides an example where the extent and nature of the policyholder’s delay in providing notice of claim made the argument in favor of coverage very difficult. But while the insurer’s denial of coverage based on policyholder’s late provision of notice arguably was justifiable in the case, the circumstances involved still present some important lessons both about notice of claim and about the policyholder’s obligations under the policy.
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Regular readers know that I frequently write about insurance coverage disputes in which insurers contend that coverage is precluded due to the policyholders’ alleged late provision of notice. All too often, the policyholders end up without coverage as a result of the late notice allegations. In an interesting (albeit confusingly written) decision, a Michigan intermediate appellate court upheld a trial court’s rejection of a professional liability insurer’s late notice argument, finding that in fact the policyholder had provided timely notice of the claim ultimately in dispute, and therefore that the insurer was not entitled to recoup amounts the insurer incurred in defending and settling an arbitration that had been filed against the policyholder. The ruling highlights the fact that notice timeliness disputes often are factually complicated and that careful consideration of the applicable facts can sometimes confirm that a policyholder did in fact comply with the notice requirements. The Michigan Court of Appeals (Oakland Circuit)’s February 26, 2019 opinion can be found here.
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coloradoA recurring professional liability insurance coverage issue is whether or not the notice prejudice rule applies to claims made policies. In a recent decision, District of Colorado Judge Richard P. Matsch, applying Colorado law, held that the notice prejudice rule did apply to claims made professional liability insurance policy with an “as soon as practicable” notice requirement, and he also rejected the carrier’s late notice defense on the grounds that the insurer’s failure to involve itself in or even inquire about the underlying claim undermined its assertion that it had been prejudiced by the late provision of notice.
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eleventh circuitMost liability insurance policies have provisions stating that the insured has a duty to cooperate with the insurer in the investigation and defense of a claim. In most claims situation, this requirement is not an issue. From time to time, however, questions arise whether or not the insured has fulfilled its duty to cooperate. Questions also arise whether or not the insurer’s conduct (or lack thereof) excuses the insured from the duty to cooperate. Two recent decisions from the Eleventh Circuit, one applying Florida law and one applying Georgia law, involved cases in which the insurer contended that it was relieved of its obligations under the relevant policy because the insured had breached its duty to cooperate. In both cases, the appellate court held that the insureds had breached their duties. The cases provide something of a roadmap for insureds to follow in avoiding challenges based on alleged breaches of the duty to cooperate.
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thnkerOne of the frequently recurring D&O insurance coverage issues is the question of whether or not the policyholder provided its insurer with timely notice of claim as required under the policy. This past week several readers sent me a copy of a recent decision in which a federal court denied coverage under a homeowners’ association’s D&O insurance policy because of the association’s untimely notice of claim. In light of the policy language involved, the facts at issue, and the court’s analysis, the court’s decision arguably is unremarkable. However, I found that after I read the decision, I couldn’t stop thinking about what the coverage denial meant for the homeowners’ association and its members. This in turn caused me to reflect upon the problems with late notice coverage disputes in general. After a brief discussion of the recent decision, I have set out below my thoughts about notice defenses.

The decision that triggered these thoughts was Central District of California Judge Jesus G. Bernal’s January 7, 2016 ruling in the coverage action brought by The Citrus Course Homeowners Association (HOA) against its D&O insurer. A copy of Judge Bernal’s decision can be found here.
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