Liability insurance - Notification provisions

(Jacobs v Coster, forthcoming in [2000] Lloyd’s Rep IR)

The standard form of liability cover—whether public liability or professional indemnity—contains an obligation on the assured to notify the insurers of events which may, or are likely, to give rise to a claim. Such clauses are complicated by two considerations. The first is that what has to be notified depends upon the wording used: the prospect that a claim is “likely” to be made is different from the prospect that a claim “may” be made. The second is that the matter has to be judged by the assured at the date of the event, and the assured’s view may not stand up to forensic scrutiny in a courtroom months or years later. For these reasons the courts have been relatively generous towards assureds in construing such provisions, and have refused to accept that there is a necessary breach of condition simply because an event not notified to them at the time of its occurrence did in fact later crystallise into a claim. The judicial tendency is reinforced by the recent decision of the Court of Appeal in Jacobs v Coster, forthcoming in [2000] Lloyd’s Rep IR.