If someone in Grand Prairie, Fort Worth, Arlington, Hurst, Euless, Bedford, Grapevine, Mansfield, or anywhere else in Texas is slow or really late in reporting a claim to their insurance company, can the insurance company get away with denying the claim based on the slow or late reporting?
The answer to the question is short: It depends!
So the follow up is: Depends on what?
There are way too many examples to give where the answer changes depending on the facts of the case and the wording in the insurance policy. One thing to be certain about is that consultation with an experienced Insurance Law Attorney improves your chances of getting the results you are looking to get. Here is a case that shows what happened under its particular facts and circumstances when analyzed next to the wording in the insurance policy.
The style of the case is Trumble Steel Erectors, Inc. Moss. This is a 2008, 5th Circuit Court of Appeals case. Here are some of the facts.
A portion of a crane operated by Trumble came in contact with an electric power line resulting in the electrocution death of its operator. Trumble’s insurance policy required that the carrier receive notice of “occurrences” like this accident “as soon as practicable.” On the day of this accident, three entities (including OSHA) undertook independent investigations that included photographing the scene and taking witness statements. The carrier did not conduct an immediate investigation because it was not aware of the incident. Three months after the incident, suit was filed against Trumble and others. The carrier did not receive notice of the incident until after suit was filed. The carrier and Trumble reached a settlement agreement and filed the instant third-party claim against the insurance broker for failure to timely notify the carrier about the accident.
In its opinion, this court held the carrier was not prejudiced by the late notice. In order to establish prejudice, an insurer must demonstrate the loss of a valuable right or benefit. Here, the carrier complained it experienced prejudice given it was unable to conduct its normal “shock-loss investigation” directly after the accident. In the carrier’s view, OSHA’s and the local authorities’ investigations did not alleviate the alleged prejudice because only the carrier’s specialized “shock-loss investigation” inquires into essential issues and immediately takes post-accident measures in an effort to decrease liability. The question thus posed to the Fifth Circuit was whether sufficient prejudice had arisen to relieve the insurer of liability. The court ultimately held that although failure to receive timely notice deprived the carrier of its desired shock loss investigation, the carrier did have an opportunity to rely on and collaborate with the three other investigating entities and also had the ability to complete its own investigation and discovery soon after suit was filed. The court went on to state: “Without more specific evidence regarding the prejudice that arose from the insurer’s inability to investigate, courts are powerless to bridge the gap between creation of an environment in which prejudice could occur and the requisite prejudice showing.”
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