Second Circuit Offers Policyholders Painful Reminder on Giving Notice of Claims: Don’t Wait, Use Correct Addresses, and Be Specific
In January 2017, the Second Circuit ruled that policyholders must actually or presumptively give their insurers notice of specific policies under which they seek coverage—mailing a notice of the claim may not be enough. Travelers Indemnity Co. v. Northrop Grumman Corp., No. 15-3117-CV, 2017 WL 391926 (2d Cir. Jan. 27, 2017).
In Northrop Grumman, the policyholder sought coverage from two of its primary and excess liability insurers for alleged trichloroethylene (TCE) contamination dating back to the 1940’s at its naval aircraft manufacturing and testing facility in New York. The policyholder provided its broker with a package of information to transmit to its insurers that included a potentially responsible person (PRP) letter alleging contamination at the facility. Although the broker attempted to forward the information on to the insurer, the broker used an incorrect address that the insurer had itself provided in connection with a separate claim relating to offsite contamination at a landfill stemming from the facility’s operations. Because the information was directed to an incorrect address, the court held that there was no presumption that the insurer received the information.
A copy of the same package containing the PRP letter was sent to a second insurer, along with the claim letter addressed to the first insurer and focusing on the landfill claim. Because the letter was addressed to the wrong insurer, the package necessarily neglected to identify the particular policies for which the policyholder was seeking coverage. Although the insurer had actual notice of the underlying circumstances from the enclosed PRP letter, relying on a New York Court of Appeals decision, the court held that the policyholder had not fulfilled its “obligation to provide separate notice as to each policy under which it seeks coverage.”
The court also agreed that notice was untimely for a third claim based on a 47-day or more delay from when the policyholder knew of the claim, citing to a case in which 36 days was considered untimely as a matter of New York law.
Here are several key takeaways from this decision for policyholders:
Submit your notice of claim promptly. This is especially true if New York law may apply to your policy, as delays of even less than two weeks have been held untimely under certain circumstances.
Use a delivery service with a tracking number or request a return receipt and keep the record with a copy of your notice package. Although this is not a requirement for your claim to be valid, it is a precaution that will help you prove both the fact of delivery and when the insurer received your notice should a dispute arise.
Carefully check your notice to ensure that it is properly addressed and that all known policies potentially providing coverage have been correctly identified. If you do not have a copy of the policy or the specific number, provide enough information for the insurer to locate the policy.
In addition to specifically identifying known policies, expressly give notice as to any other policies that the insurer has that may provide coverage that you have not identified. The insurer may have more complete records for older policies, particularly if your company has been through a merger or other corporate restructuring, so be sure to list all potential named or additional insureds that could entitle you to coverage.
Finally, if submitting claims through a broker, follow up to make sure that the broker has notified the insurer; timely submission of a claim to your broker is not a defense to an insurer’s coverage denial.