What is a Condition?
In AIG Centennial v. Fraley-Landers, 450 F.3d 761 (8th Cir. 2006) the Eighth Circuit found that Arkansas law does not require any showing of prejudice to the insurer when the insured fails to give the insurer notice of loss, and the giving of notice was made a condition precedent to coverage.
On the other hand, in Metrick/Kvaerner Fayetteville v. Federal Insurance, 403 F.3d 188 (4th Cir. 04/11/2005), the Fourth Circuit Court of Appeal found that summary judgment was inappropriate and that genuine issues of material fact were presented relating to a claim of late notice. It found that to establish the defense in North Carolina, the insurer needed to prove that:
- whether there was a delay in notifying the insurer of a covered loss (the “Notice Element”);
- if such notice was delayed, whether the insured acted in good faith with respect to the delay (the “Good Faith Element”); and
- if the insured acted in good faith, whether the insurer was nevertheless materially prejudiced by the delay (the ‘Prejudice Element”).
In assessing the meaning of the terms “claim” and “notice,” the court concluded that the submission of a claim and the giving of a notice of loss or damage are separate and distinct occurrences and requirements.
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