As the effects vary from state to state, it is important to be aware of what can happen if there is a delay in providing a proof of loss or notice to a carrier in an insurance claim. Some states are more lenient and follow the notice-prejudice rule.1 “The notice-prejudice rule requires that the insurance company can assert late notice as a defense to overage only if the late notice has caused actual prejudice to the insurer.”2 Some states, on the other hand, are much stricter on complying with any deadlines for notice or proof of loss. What can happen in Arkansas if a proof of loss is late?
In Arkansas, where an insurance policy provides that the giving of notice of a loss, claim, or a lawsuit is a condition precedent to recovery, the insured must strictly comply with the notice requirement or risk forfeiting the right to recover.3 When this is the case, the insurer need not show prejudice by any delays or lack of notification.4
In Teutonia Ins. Co. v. Johnson, where a policy of fire insurance stipulated that the insured should, within sixty days after a fire, provide a sworn statement to the insurance company provided that no suit should be sustainable until after full compliance by the insured and a failure to furnish such a proof of loss within the stipulated time operated as a forfeiture of the policy.5
The appellate court held:
The proof of loss, granting that the same was sufficient, was not made within the sixty days. This delinquency constitutes a bar to the action, and a breach of the conditions of the policy. The fire occurred on the 31st of January 1900, and this suit was instituted on the 19th day of February 1900. The courts cannot make contracts between parties, nor can the courts at all times determine what is material and what is not. These things are left to the parties to determine for themselves, as a general rule. We cannot also see the particular reason the parties have in mind when making their contracts. We construe the meaning of these contracts, when the construction becomes necessary; but when undisputed conditions are made, we are bound by them as are the parties to such contracts. It appears to us that there was one or more plain breaches of the conditions of the policy, and that these breaches by the insured prevents his recovery thereon.6
It is important to be timely and aware of when Arkansas requires strict compliance and what can happen if deadlines in policies are not strictly complied with.
1 Larry P. Schiffer, The Notice-Prejudice Rule and Claims-Made Policies, FC&S, https://www.squirepattonboggs.com/~/media/files/insights/publications/2016/06/the-notice-prejudice-rule-and-claims-made-policies/the-noticeprejudice-rule-and-claimsmade-policies.pdf
3 Fireman’s Fund Ins. Co. v. Care Mgmt., 2010 Ark. 110, ¶ 6, 361 S.W.3d 800, 803 (Ark. 2010).
5 Teutonia Ins. Co. v. Johnson, 72 Ark. 484, 490, 82 S.W. 840, 842 (Ark. 1903).