I previously posted a video about late notice of claims and the effect thereof nationwide. Recently, the Supreme Court of Montana re-affirmed that an insurer must show actual prejudice before denying a claim because of late notice.

In Atlantic Casualty Insurance Company v. Greytak,1 the Montana Supreme Court responded to a question certified to it by the Ninth Circuit Court of Appeals. The Ninth Circuit’s question was:

Whether, in a case involving a claim of damages by a third party, an insurer who does not receive timely notice according to the terms of an insurance policy must demonstrate prejudice from the lack of notice to avoid defense and indemnification of the insured.

In responding in the affirmative, the Montana Supreme Court adopted the “notice-prejudice” rule. An insurer receiving late notice of a claim “must demonstrate prejudice from that lack of notice in order to avoid the obligation to provide defense and indemnification of the insured.” The court also specifically noted this holding would apply to first and third party claims. They went on to note “The purpose of the notice-prejudice rule is to protect the insured or those claiming through the insured from a loss of insurance coverage over a technical violation of the policy when that violation is of no prejudicial consequence to the insurer”

While the case makes it’s clear that it was not too late to bring a claim for the insured, all I could think about while reading it was this video:


1 Atlantic Cas. Ins. Co. v. Greytak, No. OP 14–0412 (Mont. May 29, 2015).