قالب وردپرس درنا توس
Home / Insurance / Coverage, late notification and the rule of prejudice

Coverage, late notification and the rule of prejudice



See the full video at https://youtu.be/2mS8yQ1MD14 and at https://rumble.com/c/c-262921

An important obligation for an insurance claim the person must , through a thorough investigation with the help of the insured and the insurance company's documents, determine that there is coverage for a loss when it has been reported to the insurer. Insurers are often faced with insured persons who do not report losses immediately. Some fail to report until after an unfavorable verdict at trial. Courts differ on how to handle late claims for loss and claims depending on the policy and legislation of the jurisdiction.

The insured, who reports a claim late, will always claim that the insurer was not condemned by the delay and as a result they did not violate the terms of the insurance.

Many courts across the country have struggled for years with the issue of insured persons not immediately reporting a loss. During these years, a doctrine of insurance law has been developed, known as the "rule of prejudice". The Supreme Court of the United States stated as follows:

California's Prejudice Rule requires an insurer to prove that the insured's late notice of a claim has materially affected its ability to investigate and negotiate payment for the insured's claim. A finding of significant prejudice will generally release the insurer from its contractual obligations under the insurance policy, unless the insurer had actual or constructive knowledge of the claim. [ Shell Oil Co. v. Winterthur Swiss Ins. Co. (1993) 12 Cal.App.4th 715, 760-763, 15 Cal.Rptr.2d 815; Pitzer Coll. v. Indian Harbor Ins. Co ., 8 Cal.5th 93, 447 P.3d 669, 251 Cal.Rptr.3d 701 (Cal. 2019)] The rule applies universally to third party policies – except "claims made" policies [see detail below].

Many jurisdictions, including South Carolina, legally adopted a prejudice notice rule, in which the insurer had the burden of proving that it was materially harmed by the insured's failure to comply with the notice and the co-operation rules. [ Vermont Mut. Ins. Co. v. Singleton By & Through Singleton 316 SC 5, 12, 446 SE2d 417, 421 (1994)] If the rights of innocent parties are jeopardized by the insured not meeting the requirements of an insurance policy, the insurer must show significant damage to the insurer's rights before refuses to defend or reimburse the insured.

The rule on notice of prejudice does not apply to a date notification requirement in a non-life insurance. In a claims policy, the date-specific termination requirement defines the scope of the coverage. To excuse late termination in violation of such a requirement would thus rewrite a basic condition of the insurance contract.

Applying the rule of prejudice on the date of certain notices in a tort policy would change the parties' agreement. risk distribution. In short, to excuse late notification in violation of such a requirement would change a fundamental condition of the insurance contract. In addition, it would prevent parties from defining coverage with certainty, no matter how definitive or expressing the notification requirement. Such an outcome would significantly reduce the benefits of indemnity insurance for both insurers and insured persons: insurers could no longer "close the books" on previous insurance periods, and insurance premiums would probably rise to take into account the risk of an insured being able to notify an insurer. the insurance period has expired. Although insurers could in some way compensate for the additional risk, extending the prejudice rule to certain dates with certain claims would likely reduce the availability of this type of insurance product in Colorado. In the light of our state's policy of promoting freedom of contract, this is something we are refusing to do.


© 2021 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to serving as an insurance consultant specializing in insurance coverage, insurance claims handling, bad faith insurance and insurance fraud almost as much for insurers and policyholders.

He also acts as an arbitrator or mediator for insurance-related disputes. He practiced law in California for more than 44 years as an insurance and claims management attorney and more than 54 years in the insurance industry.

He is available at http://www.zalma.com and zalma@zalma.com. Mr. Zalma is the first recipient of the first annual Claims Magazine / ACE Legend Award. For the past 53 years, Barry Zalma has devoted his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to enable insurance companies and their indemnity staff to become insurance professionals.

Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma ; Go to Barry Zalma videos on Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to Insurance Claims Library-https: //zalma.com/blog/insurance-claims-library/ T the last two issues of ZIFL are available at https://zalma.com/zalmas-insurance-fraud- letter -2 / podcast now available at https://podcasts.apple.com/us/podcast/zalma-on-insurance/id1509583809?uo=4


Source link