Insurance Law: Failure To Give Notice As Soon As Practicable

Whether reasonableness of late notice can be decided as a matter of law, or whether it should remain in the province of the jury depends on two factors:

• the sufficiency of the excuse
• insured’s diligence after any disability has been removed

OneBeacon Am. Ins. Co. v. Catholic Diocese of Savannah involved a delay in notice months after the insured was served with the lawsuit. The insured argued that the delay was justified because the claim triggered policies that were many years old and that could not be quickly located. The insured submitted an affidavit from its counsel attesting to the justification. The Eleventh Circuit affirmed a ruling that the delay was unreasonable as a matter of law. Although the court recognized that a 21-month is not always unreasonable as a matter of law, the affidavit was conclusory, bereft of critical dates and failed to raise a fact issue as how the delay was excused or justified.

Issue Of A Notice Being Considered As Timely

Where the insured has no knowledge of a claim, courts have generally found that the issue of whether notice is timely is for the jury. For example, in United Services Automobile Association v. Middleton, the defendant was involved in an accident with another car. At the time of the accident, there were no visible injuries, and the driver and passengers stated that they were not injured. The first notice of injuries came in a letter from the other driver’s attorney nine months after the loss, at which time the insured reported the loss. The court denied the insurer’s motion for summary judgment. Similarly, in Norfolk & Dedham Mut. Fire Ins. Co. v. Cumbaa, the Court of Appeals held that a jury issue existed as to whether a 19-month delay in providing notice was timely because substantial evidence of the claim did not come to the insured until that time.

 Failure To Give Notice As Soon As Practicable

Justification for failure to give notice as soon as practicable may not include the insured’s unfounded conclusion that there was no liability to the other party. It is the insurer’s job to reasonably investigate the issues of liability and damages. An insured is not required, however, to foresee every possible claim that could arise from an incident. In Newberry v. Cotton States Mut. Ins. Co., the insured attended a work-related social function and fought with another guest. The insured did not notify its insurer until 14 days after being served with a complaint. The insured testified that he believed any claims arising from the incident would be handled through worker’s compensation. The Court of Appeals held that an insured is not required to foresee every possible claim but is required only to act reasonably under the circumstances, creating an issue for the jury’s determination.

Forshee v. Employers Mut. Cas. Co.

Forshee v. Employers Mut. Cas. Co., the Court of Appeals explained:

Sometimes an event is so trivial or inconsequential that a court properly may conclude as a matter of law that no reasonable person would think that a claim could arise from the event and, therefore, that no notice of the event is required…it is the nature and circumstances of the accident or the incident and the immediate conclusions an ordinarily prudent and reasonable person would draw therefrom that determine whether an insured has reasonably justified his decision not to notify the insurer. Relevant circumstances include the nature of the event, the extent to which it would appear to a reasonable person in the circumstances of the insured that injuries or property damage resulted from the event, and the apparent severity of any such injuries or damages…A court also properly may consider whether anyone gave an indication that he intended to hold the insured responsible for the event and resulting injuries and the extent to which the insured acknowledged the likelihood that a claim could arise from the event, either by offering compensation to the injured person or asking him to sign a release…And a trial court must make every effort to eliminate the distorting effects of hindsight and to evaluate the conduct of the insured from the perspective of a reasonable person in the same circumstances as those in which the insured found himself.

Georgia Mutual Ins. Co. v. Criterion Ins. Co.

In cases where the policy requires notice “as soon as practicable,” an insured’s failure to give notice due to a lack of knowledge that coverage existed may be a jury question. In Georgia Mutual Ins. Co. v. Criterion Ins. Co., the insureds failed to give notice to the insurer for four months because they did not know their policy provided coverage for a new car. The Court of Appeals held that the issue of late notice was a jury issue.

State Farm Mut. Automobile Ins. Co. v. Sloan

In State Farm Mut. Automobile Ins. Co. v. Sloan, the insureds believed there would be no insurance coverage for an accident and did not give notice to their insurer for six months because their son was driving the car, the son was not named as an insured, and the son was driving a car not covered by the insurance policy. Again, the Court of Appeals held that whether the insureds notified their insurance company “as soon as practicable” was an issue to be determined by a jury.

Hill v. Safeco Insurance Company of America

In contrast, where a policy provides that notice be given “immediately,” failure to give notice may be subject to determination as a matter of law. In Hill v. Safeco Insurance Company of America, the Middle District of Georgia granted the insurer’s motion for summary judgment as to the insured’s failure to comply with the notice provision of his policy. The insured was required to give “immediate notice” to Safeco of the loss. The insured failed to give notice for six months because he did not believe his policy provided coverage for the loss.

If an insured fails to give notice of a complaint and summons as required by a policy and later provides notice of an amended complaint, each notice is subject to separate analysis. In other words, there is no “blanket rule” that if notice is untimely of an initial complaint, notice of an amended complaint is not necessarily untimely if it alleges new claims.