{"id":194,"date":"2016-02-26T17:20:54","date_gmt":"2016-02-26T21:20:54","guid":{"rendered":"http:\/\/blogs.duanemorris.com\/insurancelaw\/?p=194"},"modified":"2016-02-26T17:20:54","modified_gmt":"2016-02-26T21:20:54","slug":"no-prejudice-in-new-jersey-needed-to-bar-coverage-to-sophisticated-insured-for-delay-in-notice-under-claims-made-policy","status":"publish","type":"post","link":"https:\/\/blogs.duanemorris.com\/insurancelaw\/2016\/02\/26\/no-prejudice-in-new-jersey-needed-to-bar-coverage-to-sophisticated-insured-for-delay-in-notice-under-claims-made-policy\/","title":{"rendered":"No Prejudice in New Jersey Needed to Bar Coverage to Sophisticated Insured for Delay in Notice Under Claims-Made Policy"},"content":{"rendered":"

By Sheila Raftery Wiggins<\/strong><\/em><\/p>\n

The Supreme Court of New Jersey \u2013 the highest court in New Jersey \u2013 held that the failure to comply with the notice provisions of the claims-made policy constitutes a breach of the policy, permitting the insurer to decline coverage to a sophisticated insured without demonstrating prejudice to the insurer caused by the delay.<\/p>\n

We previously reported<\/a> on where the Appellate Division ruled, in Templo Fuente de Vida Corp. and Fuente Properties, Inc.<\/em>, that for a claims-made policy, the policy holder is to provide notice of a claim: (1) during the same policy period in which the policyholder received the claim and (2) \u201cas soon as practicable.\u201d Otherwise, the claim may be denied because of late notice. The New Jersey Appellate Division determined that six months or more is not \u201cas soon as practicable.\u201d<\/p>\n

Underlying facts<\/strong>: In 2005, Templo Fuente de Vida Corp. and Fuente Properties, Inc. (jointly, \u201cTemplo\u201d) filed a lawsuit against Morris Mortgage, Inc. and its affiliates (jointly, \u201cMorris\u201d) regarding a failed real estate purchase. After being served with the complaint, Morris waited more than six months to provide notice of the lawsuit to its Directors and Officers (\u201cD&O\u201d) insurance carrier, National Union Fire Insurance Company of Pittsburgh, P.A. (\u201cNational Union\u201d). National Union disclaimed coverage on multiple grounds, including that Morris did not provide notice \u201cas soon as practicable\u201d as required under the D&O policy.<\/p>\n

In June 2009, Templo and Morris settled their dispute for approximately $3.6 million. Morris paid Templo approximately $100,000 and assigned to Templo their claims against National Union for coverage under the D&O policy regarding the remaining $3.5 million.<\/p>\n

Templo then sued National Union. The trial court granted summary judgment to the insurer. The trial court found that coverage was barred under New Jersey precedent holding that a 5-\u00bd-month delay was not \u201cas soon as practicable.\u201d The trial court ruled that the insurer did not have to show that it was prejudiced by the late notice.\u00a0 The Appellate Division agreed.<\/p>\n

Analysis<\/strong>:\u00a0 The Supreme Court rejected the insured\u2019s argument based on \u201cequitable concerns\u201d that unsophisticated consumers are unaware of all the policy\u2019s requirements regarding providing notice.\u00a0 Here, the Supreme Court focused on the policy at issue \u2013 a Directors and Officers claims-made policy \u2013 where the policyholders are particularly knowledgeable insureds purchasing their insurance requirements through sophisticated brokers.\u00a0 Significantly, the Court stated that it was not making \u201ca sweeping statement\u201d about the strictness of enforcing the \u201cas soon as practicable\u201d notice requirement in claims-made policies generally (i.e.<\/em>, for unsophisticated consumers).\u00a0 That issue apparently remains unresolved.<\/p>\n

Lesson<\/strong>: \u00a0The sophistication of the parties may be significant as to whether prejudice will be required by New Jersey courts to deny coverage for late notice under a claims-made policy.\u00a0 By declining to make a \u201csweeping statement\u201d about the strictness of enforcing the notice requirement generally, the Supreme Court left room to either follow or depart from this rule in the context of unsophisticated insureds.\u00a0 However, the best course of action is always to provide prompt notice of any claim.<\/p>\n

Sheila Raftery Wiggins<\/a>, of the Newark office<\/a>, handles matters involving complex commercial disputes, insurance defense, insurance coverage disputes, financial fraud, and attorney ethics.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

By Sheila Raftery Wiggins The Supreme Court of New Jersey \u2013 the highest court in New Jersey \u2013 held that the failure to comply with the notice provisions of the claims-made policy constitutes a breach of the policy, permitting the insurer to decline coverage to a sophisticated insured without demonstrating prejudice to the insurer caused … <\/p>\n

Continue reading “No Prejudice in New Jersey Needed to Bar Coverage to Sophisticated Insured for Delay in Notice Under Claims-Made Policy”<\/span><\/a><\/p>\n","protected":false},"author":6,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[314,260,42,12,215,6,261,157,95,313],"ppma_author":[417],"class_list":["post-194","post","type-post","status-publish","format-standard","hentry","category-general","tag-breach","tag-claims-made","tag-coverage","tag-insurance","tag-insurer","tag-new-jersey","tag-notice","tag-policy","tag-policyholder","tag-sheila-raftery-wiggins"],"authors":[{"term_id":417,"user_id":6,"is_guest":0,"slug":"duanemorris3","display_name":"Duane Morris","avatar_url":"https:\/\/secure.gravatar.com\/avatar\/843ff6e7a8fe5fc92109b47a45f34b6cf0ea499e6e788db23456c838b0ae6747?s=96&d=blank&r=g","author_category":"1","last_name":"Sullivan","first_name":"Margaret","job_title":"","user_url":"http:\/\/www.duanemorris.com","description":"Visit the Duane Morris website.<\/a>"}],"_links":{"self":[{"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/posts\/194","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/comments?post=194"}],"version-history":[{"count":0,"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/posts\/194\/revisions"}],"wp:attachment":[{"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/media?parent=194"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/categories?post=194"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/tags?post=194"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/ppma_author?post=194"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}