Georgia Insurance Law: Giving Timely Notice of a Potential Claim to a Business's CGL Carrier
As explained in a previous article, An Insurance Carrier's Duty to Defend an Insured Georgia Business in a Lawsuit, insurance carriers have a duty to provide a paid defense to a lawsuit for their insureds in certain circumstances. The insured, however, has to comply with all of the requirements in the insurance policy or the insurance carrier may have grounds to deny the claim out right.
As a Georgia insurance lawyer, one such requirement in every liability policy I have ever come across is that the insured must provide the insurer with timely notice of the claim. In many circumstances, the insured is required to provide notice to their insurance carrier before a lawsuit is ever filed. The exact wording varies by policy, but generally that means that as soon as the insured has reason to believe someone may file a claim against the insurance policy or may file a lawsuit, the insurance carrier must be notified.
According to Georgia courts, a determination of whether an insured was justified in delaying providing such notice to its insurance carrier should be evaluated based on the conclusions a reasonable person under the circumstances would draw. These factors include:
- The nature of the event;
- The extent to which it would appear to a reasonable person in the circumstances of the insured that injuries or property damage resulted from the event;
- The apparent severity of any resulting injuries or damage;
- Whether anyone gave an indication that they intended to hold the insured responsible for the event and resulting injury or damage; and
- The extent to which the insured acknowledged the likelihood that a claim could arise from the event, either by offering compensation to the injured person or asking them to sign a release.
This was the very subject of a recent lawsuit between an insurance carrier and a Georgia gas station it insured in Forshee v. Employers Mutual Casualty Company. In 2007, a woman fell in the parking lot of the service station as she was walking towards the convenience store. No employee of the service station saw the fall, but the owner saw her on the ground and helped her up. This woman and her male companion walked back to their car. She refused the owner’s offer to call for medical assistance and told the owner she was just going to go home. She commented that her arm hurt, but then she and her companion left. No one at the convenience store was able to identify this woman. This woman was not heard from again until almost 2 years later when she filed a personal injury lawsuit.
The owners of the convenience store immediately notified their CGL carrier of the lawsuit. The insurance carrier then filed a separate action with a Georgia Court arguing that they should not have to provide the convenience store with a defense to the lawsuit since the owners of the convenience store waited 2 years to inform the insurer of the event and the policy requires the insured to provide notice as soon as practicable. The trial court held that an accident resulting in injuries as severe as those sustained in this case should be promptly reported to the insurance carrier and since this incident was not promptly reported, the insurance carrier did not need to provide a defense.
The Georgia Court of Appeals told the trial court they did not apply the right analysis to this case and told them to try again. The Georgia Court of Appeals explained as follows:
[T]he law only requires an insured to act reasonably under the circumstances. So, if a reasonable and ordinarily prudent person would conclude that an event forms no basis for a possible claim, the failure of the insured to give notice of the event is justified and no bar to coverage. Sometimes an event is so trivial or inconsequential that a court properly may conclude as a matter of law that no reasonable person would think that a claim could arise from the event and, therefore, no notice of the event is required.
If your Georgia business may be sued in the near future or you have been sued already, contact V&T Law to discuss your options going forward.