Because the effects vary from state to state, it is important to be aware of what can happen if there is a delay in providing proof of loss or notice to a carrier in an insured claim. Some states are more lenient and follow the notice-prejudice rule.1 “The notice prejudice rule requires that the insurer may assert late notice as a defense to excess only if the late notice has caused actual injury to the insurer.”2 Some states, on the other hand, are much stricter about meeting any deadlines for notification or proof of loss. What can happen in Arkansas if a proof of loss is late?
In Arkansas, where an insurance policy provides that notice of a loss, claim or lawsuit is a precedent permission for recovery, the insured must strictly follow with the notice requirement or risk forfeiting the right to refund.3 When this is the case, the insurer need not show prejudice by any delay or lack of notification.4
IN Teutonia Ins. Co. v. Johnsonwhere a fire insurance policy provided that within sixty days of a fire the insured should file an affidavit with the insurance company, provided that no suit would be maintainable until after the insured complied and failure to provide such proof of loss within the prescribed time operated as a forfeiture of the insurance.5
The Court of Appeal considered:
The proof of loss, admitting the same to be sufficient, was not made within the sixty days. This criminality constitutes a bar to the action and a breach of the terms of the policy. The fire occurred on January 31, 1900, and this suit was filed on February 19, 1900. The courts cannot enter into agreements between parties, nor can the courts always determine what is material and what is not. These matters are left to the parties to decide themselves, as a general rule. Nor can we see the particular reason which the parties have in mind when they make their agreement. We interpret the meaning of these contracts when construction becomes necessary; but when non-disputing terms are made, we are bound by them as are the parties to such agreements. It appears to us that there was one or more manifest violations of the terms of the insurance, and that these violations by the insured prevent his recovery.6
It is important to be on time and be aware of when Arkansas requires strict compliance and what can happen if policy deadlines are not strictly met.
1 Larry P. Schiffer, The notice-prejudice rule and claims policiesFC&S, https://www.squirepattonboggs.com/~/media/files/insights/publications/2016/06/the-notice-prejudice-rule-and-claims-made-policies/the-noticeprejudice-rule-and – claimsmade-policies.pdf
3 Fireman’s Fund Ins. Co. v. Care Mgmt., 2010 Sheet. 110, ¶ 6, 361 SW3d 800, 803 (Ark. 2010).
5 Teutonia Ins. Co. v. Johnson72 Sheets. 484, 490, 82 SW 840, 842 (Ark. 1903).