What do the following have in common?
- Your receipt of a subpoena and a Complaint in a lawsuit that has been filed against you
- Your receipt of a letter or a Complaint from the Equal Employment Opportunities Commission (EEOC)
- A letter from an attorney indicating that a claim has been made by another person against you for injury or damage to property or an offense otherwise covered under the policy
- You know that an injury has occurred or that someone else’s property has been damaged arising out of your negligence
- During a pending lawsuit, you receive legal documents requiring that you appear at a hearing or provide information
If you fail to respond in a timely manner:
- You will automatically lose the lawsuit; and/or
- Coverage could be denied by your insurance company.
Let’s take a look at some sample policy language from a somewhat typical
|Duties in the Event of Occurrence or Offense|
|You must see to it that we are notified as soon as practicable of an “occurrence” or an offense which may result in a claim. To the extent possible, notice should include:
||You must report an “occurrence” or an offense that may result in a claim. If an employee is aware of an injury such as a slip and fall or an auto accident, that knowledge is imputed to you.|
|Duties in the Event of a Claim or Suit|
| If a claim is made or “suit” is brought against any insured, you must:
You must see to it that we receive written notice of the claim or “suit” as soon as practicable.
|If you don’t do this, you are in violation of policy conditions and the insurance company could deny the claim.|
|You and any other involved insured must:
||If you don’t do this, the claimant could automatically win the lawsuit and the insurance carrier will no longer cover that claim. If you are served a subpoena, you generally have 21 days from receipt to have an answer filed. If you are relying on the insurance carrier to retain an attorney to do this for you, it takes time for the insurance carrier to agree to cover the claim (not always guaranteed) and then retain an attorney for you. The better practice in a lawsuit is to have your business attorney file an answer to buy time for the insurance carriers coverage determination and to retain an attorney for you.|
|What Is A Lawsuit?“Suit” means a civil proceeding in which damages because of “bodily injury”, “property damage” or “personal and advertising injury” to which this insurance applies are alleged. “Suit” includes:|
||A “suit” includes arbitration.|
|No insured will, except at that insured’s own cost, voluntarily make a payment, assume any obligation or incur any expense, other than for first aid, without our consent.||If you settle a claim on your own, you will violate the policy conditions.|
|What Is An Occurrence?“Occurrence” means an accident, including continuous or repeated exposure to substantially the same general harmful conditions.|
|Knowledge of Occurrence|
|Under Section IV – Commercial General Liability Conditions, Condition 2. – Duties in the Event of Occurrence, Offense, Claim or Suit, paragraph e. is added as follows:Notice of an “occurrence”, offense, claim or “suit” will be considered knowledge of the insured if reported to an individual named insured, partner, executive officer or an “employee” designated by you to give us such a notice.||Some, but not all, insurance carriers modify the notice condition to apply to a limited number of people – not everyone.|
|Unintentional Failure to Notify|
|Under Section IV – Commercial General LiabilityConditions, Condition 2. – Duties in the Event of Occurrence, Offense, Claim or Suit, paragraph g. is added as follows:Your rights afforded under this policy shall not be prejudiced if you fail to give us notice of an “occurrence”, offense, claim or “suit”, solely due to your reasonable and documented belief that the “bodily injury” or “property damage” is not covered under this policy.||Some, but not all, insurance carriers will not claim default under these specified conditions.|
Insurance carriers will almost always deny a late-reported claim, especially when the failure to report puts them at a disadvantage and/or could potentially cost them a significant amount of money. If they deny the claim, you will be on your own to attempt to have the default removed or to defend you or your business.
When it comes to injuries, claims, subpoenas or similar legal documents, seconds count and indeed, IF YOU SNOOZE, YOU LOSE.