Insurance policies are contracts.
Though that sounds obvious, it’s worth remembering because the terms of that contract with your insurance company govern whether you get coverage for your loss. And sometimes those terms don’t mean what you (or the insurance company) might think they mean.
Take for example a decision from a few years back. In Owatonna Clinic v. The Medical Protective Company of Fort Wayne, Indiana, Medical Protective denied coverage because its policy required notice of a claim with specific pieces of information, and the company believed the clinic provided insufficient notice of claims made asserted against one of its doctors. The Eighth Circuit Court of Appeals, affirming a decision by the United States District Court for the District of Minnesota, agreed that the clinic’s notice didn’t contain every piece of information called for in the insurance policy. Nevertheless, the notice was deemed sufficient because it provided the insurance company with “knowledge of all relevant particulars” and the court concluded that “the law of Minnesota places a burden of inquiry on the insurer when it has notice of facts that would raise a likelihood of a claim.”
The Eighth Circuit and District of Minnesota decisions in Owatonna Clinic are consistent with the general principle that Minnesota courts decline to deny insurance coverage for technical reasons – particularly when the issue is one of notice. However, though they favored the insured, the Owatonna Clinic decisions also bring focus to the importance for insureds of providing their insurance companies with notice that is as complete as possible as soon as possible. Had the clinic’s notice contained even a little less information, it is possible the decisions would have gone the other way. And because the policy was a claims-made policy, if the notice had been delayed until after the policy period expired the decisions very likely would have gone the other way.
Ultimately, then, this decision highlights how important it is a) for insurance companies to carefully consider before denying a claim for technical reasons, even if they think their policy language supports that decision; and b) for individuals and businesses to carefully read their insurance policies when pursuing claims. For everyone involved, it is often a good idea to seek guidance from attorneys experienced in insurance law.