The Issue. There has been an injury, or damage to property, during your project. Now what? When and to whom you report the claim can be critically important, and many times it is not as straight-forward as you. And, once notice has been provided, when and how should you respond to an insurer’s denial or reservation of rights?
Why It’s Important. Failure to provide notice to an insurer in a timely manner can, under certain circumstances, result in a forfeiture of coverage under the policy. Responding to an insurer’s reservation of rights can be equally important, ensuring the policyholder receives the full coverage for which it bargained.
Short Answer. In determining which insurers to notify, it is important to ask two questions. First, did the injury or damage occur over more than one policy period? In Ohio, and most states, more than one policy may provide coverage for damage that spans multiple policy periods. Second, whose policies might provide coverage for the injury or damage? Should subcontractors’ or suppliers’ policies also be placed on notice? Once potentially responsive policies are identified, it is sound practice to give notice early—sometimes even before a claim is formally made. However, under many policies, late notice alone will not be enough to forfeit coverage. In states like Ohio, an insurer must first demonstrate that it was prejudiced by the late notice in order to avoid its coverage obligations. Finally, if an insurer accepts defense of the claim under a reservation of rights, it is important to provide a response to the extent you disagree with the insurer’s description of its obligations.