Late Insurance Notice to Your Insurer? How Lack of Prejudice Can Keep Coverage Intact

Illinois courts weigh five factors when deciding if notice was “reasonable.” These factors include policy language, the insured’s understanding of insurance, whether they knew of an event triggering coverage, and most importantly, whether the delay harmed the insurer’s ability to investigate or gather evidence. Without prejudice to the insurer, a late notice may not sink a policyholder’s coverage.

The ruling here reminds policyholders: while prompt notice is always the best route, a delay doesn’t automatically mean coverage is off the table. If your insurer hasn’t been hurt by the delay, they may still need to defend you.

Why Should This Matter to You?

The court’s decision in Old Republic reiterates a crucial point: notice requirements are important, but courts also care about fairness. If you’re dealing with a similar situation, remember that states like California and Illinois expect insurers to demonstrate prejudice if they’re going to deny your claim on the basis of late notice.

And here’s something you may not know: depending on your state, policies may have different requirements based on whether they are “occurrence” policies (covering events when they happen) or “claims-made” policies (covering claims when they’re reported). The notice-prejudice rule may apply differently depending on this distinction, so be sure to read your policy closely.