Please make sure to notify your liability insurance carrier (such as your CGL carrier) of a claim and lawsuit as soon as possible. As an insured, you have an obligation in the insurance policy to notify your insurer of any legal action against you. Not doing so will just give your insurer the argument that you breached the policy by failing to provide notice as a means to void coverage. Even if you are a claimant seeking insurance proceeds from an insured’s liability carrier, it is always good practice to notify that carrier directly of a claim or lawsuit against the insured. Take the “lack of notice” defense out of the equation.
Recently, a Florida federal district court held that an insurer does not owe an insured a duty to defend or indemnify that insured simply because that insured receives a Florida Statutes Chapter 558 Notice of Defects letter. (Check out this article for more information on Chapter 558 Notice of Defects letters.) Irrespective of this ruling, it is always good practice to notify your insurer of any claim or Notice of Defects letter you receive. And, as mentioned above, it is good practice as a claimant to notify the insured’s insurer of your claim or Notice of Defects letter. There is generally no value not keeping an insurer notified.
For example, a pipe ruptured and a fire occurred at an insured’s premises causing damage to a pharmacy located below the premises. The pharmacy sued the insured but the insured never responded and a default judgment was entered against the insured. After obtaining the judgment, the pharmacy sued the insured’s CGL policy. The CGL insurer successfully argued that the insured breached the policy and coverage should be voided because it never received notification of the pharmacy’s lawsuit against the insured.
Please contact David Adelstein at firstname.lastname@example.org or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.