Notifying your insurers of potential claims ‘as soon as possible’ – what are your obligations?
17 Jul 2017 |
2 minute read
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Recent case law has examined the meaning of the phrase 'as soon as possible' in relation to notification of potential claims to the insurer.
In the case of Zurich Insurance PLC v Maccaferri Ltd, Zurich sought to refuse cover under Maccaferri's product and public insurance liability policy on the ground that Maccaferri had failed to notify them of the potential claim in accordance with the terms of the policy.
The policy stated that the insured should provide:
notice in writing to the insurer as soon as possible after the occurrence of any event likely to give rise to a claim
and that the insured should
on receiving verbal or written notice of any claim intimate or send same or a copy thereof immediately [to the insurer].
Maccaferri hired out “Spenax Guns” to builders’ merchants, who in turn hired them out to building contractors, for use in joining metalwork together. In a particular incident in 2011, a builder had suffered an injury using the Spenax Gun. A Maccaferri representative found out, informally, about the incident approximately a week later, but was not told that the accident had involved the Spenax Gun. In October 2011 Maccaferri learned that tests may be done on the Spenax Gun (still in the possession of the contractor) but nothing more. It was not until a claim was issued by the injured employee, against the contractor in August 2012, with Maccaferri subsequently being joined to the claim in March 2013 that the full scale of the employee's injuries, caused by the Spenax Gun, came to light. It was at this point that Maccaferri notified Zurich of the claim; Zurich refused to provide cover on the grounds that Maccaferri had failed to notify them about the incident, since it had been aware that an incident had taken place involving the Spenax Gun over a year prior to notification.
The Court held that Zurich was wrong to refuse cover. The policy wording imposed by Zurich could only be interpreted to mean that the Insured's obligation to notify Zurich arose in circumstances where, objectively, a reasonable person with the actual knowledge of the insured would have thought that there was at least a 50% likelihood that a claim would arise. In the circumstances above, this threshold was not met.
Insurance policy wording will often contain phrases such as 'likely to give rise to a claim'. The Court has confirmed that this means notification is only needed where objectively the likelihood of a claim in respect of a particular event is above 50%. Further, unless specific time limits are set out, then the meaning of the phrase "as soon as possible" only relates to the promptness by which the insured should notify the insurer of the event once it has ascertained that there is a likelihood of a claim being brought.
This case emphasises the importance of having regard to the exact policy wording in light of the particular circumstances, but provides a level of reassurance to policyholders in showing that the Court will not construe a policyholder's obligations to go beyond the natural meaning of the language in the policy.
Our advice, however, would always be to notify insurers promptly of any potential claims to minimise the risk of disputes as to whether cover can be avoided.
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Please contact Mark Rhys-Jones, partner on +44 117 915 4613 ([email protected]).
