Disclaimers of coverage based on untimely notice are always a source of controversy, and it is interesting to see how various jurisdictions deal with the issue. Recently, the Connecticut Supreme Court made new law concerning the scope of an insured’s duty to notify its insurer of a potential claim. The Court ruled that the insured cannot excuse late notice simply because he spoke with the claimant who did not indicate that he would bring a claim. A subjective belief that there would not be liability does not excuse late notice where the circumstances would have led a reasonable person to believe that he/she could potentially be liable.

In Arrowood Indem. Co. v. King, the insured’s son was driving an ATV and used a rope attached to the ATV to tow the claimant on a skateboard. The claimant fell off the skateboard and suffered severe head injuries. The insureds did not notify their insurance company of the accident because they met the injured boy’s parents and the parents did not indicate that they intended to bring a lawsuit.

The court ruled that regardless of the insureds’ belief based on the social interactions between the parents, a reasonable person would have believed that liability may have been incurred because of the severity of the injury. Therefore, the insureds failed to provide timely notice and the insurer could deny the claim as long as it proved prejudice.

Thanks to Mendel Simon for his contribution to this post.

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