Insurers Join in Illinois Court Case That Could Alter Timely Claim Notice

The National Association of Mutual Insurance Companies joined with the Illinois Insurance Association Nov. 22 to file an amicus brief in a case dealing with the issue of timely notice to an insurer of a claim or lawsuit. The case, Country Mutual Insurance Co. v. Livorsi Marine, Inc., is before the Illinois Supreme Court.

To date, Illinois courts have not required an insurer to prove prejudice in order to deny coverage to an insured that breached the notice requirement contained within the insurance contract.

“Reversal of this case by the Illinois Supreme Court would have the
potential to impact every NAMIC member company doing business in Illinois,” said NAMIC’s Regulatory Affairs Counsel Marsha Harrison.

“To effectively perform their contractual obligations to a policyholder, insurance companies must be able to investigate claims on a timely basis,” said Harrison. “The more time that passes after a claim occurs, the more difficult it is for any interested party, including an insurer, to determine what happened. This is the rationale behind the policy requirement that an insured give timely notice to his insurer of a lawsuit filed against the insurer.”

Harrison added that to require insurers to provide coverage in a case, such as the Livorsi situation, where notice is unreasonably late and the insured has no excuse for the unreasonable lateness, would be the same as negating the timely notice provision of the contract.

“Insurers cannot continue to do business in an environment in which the courts are prone to rewrite insurance policies,” concluded Harrison.