How to Survive a Late Notice Challenge in an Environmental Insurance Coverage Action
Since the mid-1980’s, environmental insurance coverage claims have been the most complex of insurance coverage claims. Insurance companies usually will not voluntarily provide coverage for gradually-occurring environmental claims without a fight, which typically takes the form of insurance coverage litigation that can be costly and time-consuming.
A policyholder must overcome many hurdles to obtain coverage for an environmental claim. This article discusses the threshold issue, whether the policyholder’s notice to the insurance company was timely. This is the issue that you must overcome just to get to first base in the dispute.
There are two types of notice required under most liability insurance policies: notice of an “occurrence,” and notice of a claim. The time when notice of a claim is required often is clear, and most policyholders know to give their insurance companies notice soon after receiving a claim. Most insurance coverage fights involving notice concern the timeliness of notice of an occurrence, which is the cause of the damage (“an accident... which results in property damage”). When property damage has happened at an environmental site and the policyholder faces cleanup obligations, notice may be due. In most jurisdictions, an insurance company cannot avoid coverage on late notice grounds unless it demonstrates that it was harmed, or “prejudiced,” by the late notice. Since most insurance companies simply will not pay an environmental insurance claim without a fight, the policyholder should argue that the insurance company could not be prejudiced if notice was late, because they would not have provided coverage regardless of when notice was given. If you are fortunate to be in such a jurisdiction, you must aggressively pursue discovery on the insurance company’s history of handling environmental claims.
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