Insurance Company's Duty To Defend Triggered by Actual Notice of Claim



Practice Areas

Robinson Bradshaw Publication
March 30, 2011

The North Carolina Court of Appeals recently resolved an important question to all businesses covered by liability insurance: does an insurance company’s duty to defend the insured against a claim “attach when the insurer receives notice or when a claim is filed?” The court adopted the majority rule that an insurance company’s duty to defend is not triggered until the insurer receives actual notice of the underlying action. Kubit v. Mag Mut. Ins. Co., 2011 N.C. App. LEXIS 482 (March 15, 2011). This decision is important because it is common, for any number of reasons, for a significant period of time to elapse before an insured business notifies its insurance carrier of a claim, during which time substantial attorneys’ fees and other defense costs can accrue. It is now the law of North Carolina that such pre-notice fees and other costs cannot be recovered from the insurer. Thus, care should be taken to provide the earliest possible notice of any claim that is potentially covered under a liability policy.

The Court of Appeals’ decision also touched on a number of important issues to consider when notifying an insurance company of a claim:

We hope you find this advisory helpful, and invite you to contact one of Robinson Bradshaw’s insurance coverage attorneys with any questions you may have.

Main Menu