In practically every insurance policy, a policyholder is required to give prompt notice of the claim before the insurance company has any responsibility to act on the claim.
What happens if the policyholder substantially delays in giving notice of the claim, or in some circumstances, fails to give notice altogether? Is the policyholder’s claim automatically barred or forfeited?
In Arizona, fortunately for the policyholder, delayed notice or lack of notice in and of itself does not preclude coverage. In the seminal case of Lindus v. Northern Insurance Company of America,1 the Supreme Court of Arizona held that in order for an insurance company to successfully assert a defense of lack of notice, it must show actual prejudice from the delay. In Lindus, the insured did not notify one insurer of the accident until two years after the occurrence and another insurer for seventeen months. The court in Lindus found that neither insurer carried the burden of proving prejudice where they had access to investigative reports and had an opportunity to further investigate. Moreover, mere delay is not sufficient to show prejudice to an insurance company.2 In other words, if there is no actual prejudice, the delayed notice does not by itself extinguish coverage.
This rule in Arizona is definitely pro-consumer. Certainly, when it comes to homeowner policies and homeowner claims, little is gained by not giving prompt notice of the claim. However, in the event that circumstances either hinder or prevent timely notice, it is good to know that the claim can still be made even when it is late. Arizona policyholders: If an insurance company refuses to accept your claim or denies your claim because it is deemed late, you may want to consult an insurance professional.
You still may have rights despite what the insurance company tells you.
1 Lindus v. Northern Ins. Co. of America, et al., 103 Ariz. 160 (1968).
2 Globe Indem. Co. v. Blomfield, 115 Ariz. 5 (1977).