Insurance policy not cancelled for failure to promptly notify insurer of claim

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By Dave Tate, CPA, Esq. - Here is a handy insurance tip that may surprise you: you may still have coverage for a claim even if you breach the policy clause requiring that you promptly notify your insurance company of a claim. In the case of PAJ, Inc. v. Hanover Insurance Co., which is discussed at, the Texas Supreme Court recently held that an immaterial breach of the duty to provide notice does not deprive the insurer of the benefit of the bargain and thus also does not relieve the insurer of its contractual obligation to provide coverage. The policy language required the insured to notify the insurer of any claim or suit brought against the insured “as soon as practicable.” The insured was unaware that its CGL policy covered the dispute, and did not notify its insurer until four to six months after litigation commenced. The Court held that failure to timely notify the insurer of a claim or suit does not defeat coverage where the insurer is not prejudiced by the delay.

I will be out for a few days, but will be back next week.

Dave Tate, CPA, Esq.


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