The Clock is Ticking…

The Importance of Prompt Reporting of Premises Liability Claims

Many claimants decline to report accidents at or around the time they occur. Indeed, a claimant (or more often their attorney) may wait months, or even years, before reporting the incident. Why? The longer they wait, the more difficult it can be for your insurance carrier to investigate, evaluate, and dispose of the claim.  

Unfortunately, owners or managers often contribute to the problem by failing to immediately inform their liability carriers as soon as they become aware of an incident.  Even if not formally presented as a claim, owners or managers must notify their liability carriers. As discussed further below, delayed reporting not only complicates investigation, defense, and resolution, to the benefit of the claimant, but may imperil the coverage available for the loss. 

Delayed Investigation 

Reporting a claim (or potential claim) promptly allows the insurance carrier to immediately initiate their investigation processes. This includes, among other things, interviewing pertinent witnesses and insured employees, obtaining relevant documentation, and securing all evidence, including such things as photographs, video coverage, and/or the subject condition.  

The timeliness of the above is vitally important. Notably, a witnesses’ recall is more accurate and reliable the closer in time to the subject events. Worse, the likelihood that a witness will move and/or become unwilling to cooperate increases as more time passes.  

It is also essential to interview employees quickly after the claim is reported. Employees often leave their positions by way of termination. Once terminated, the former employees are frequently unwilling to cooperate (even if they can be located). The same may even hold true when the employee has left her position voluntarily. As such, it is essential to interview employees as quickly as possible to ensure cooperation. 

Further, delayed reporting may impact the collection of physical evidence. For example, digital video is often maintained for 30 days or less. Phones, on which photographs are now most typically taken, are frequently lost, broken, or replaced. Moreover, documentation is frequently lost or not retained, in many cases due to the transfer of ownership. Finally, at some point post-incident, the alleged defective condition may be modified, precluding the documenting thereof. Preserving the scene, and any physical evidence, is frequently impaired by delayed reporting.

Delayed Resolution 

It is widely recognized that the ability to resolve claims decreases as more time elapses from the date of loss. Within a short time of the incident, the claimant will have unlikely yet consulted with counsel. Moreover, she may lack a complete understanding of her alleged injuries and/or had an opportunity to undergo substantial treatment (whether justified or not). Once one or more of these events occur, the carrier’s ability to most favorably resolve the claim diminishes significantly. As such, promptly reporting a claim positively improves your carrier’s ability to obtain the most favorable resolution.  

Delayed Mitigation 

Untimely reporting may also increase the potential for future claims. Following a loss, and once the carrier has documented the alleged condition, recommendations will often be made for remediation. These remediation efforts, which are typically inadmissible if a suit is filed, could be essential to reduce the potential for further claims. If not performed, the prior incident or incidences may be evidence that the condition is dangerous. The sooner the carrier is on notice, the sooner recommendations can be made, and any necessary remediation commenced.  

Delayed Reporting May Impair Litigation Defense 

Delayed reporting may complicate the carrier’s ability to defend claims once a suit is filed. As an initial matter, delayed reporting, particularly the reporting of suits, increases the potential for default judgments. Often, at the time of reporting, a claimant will have already filed a suit. If not promptly reported, the carrier may be unable to assign counsel in sufficient time to allow for a timely appearance. When this occurs, the court may grant a default judgment, often guaranteeing your exposure.  

Additionally, as discussed above, an essential reason for prompt reporting is the preservation of the scene and physical evidence. Once an owner or manager is on notice of a claim, most courts require that evidence be maintained. This provides the claimant with an opportunity to inspect the condition and obtain copies of any video, photographs, or other physical evidence and documentation.  

In the event the evidence is not maintained, claimant’s counsel will almost certainly assert spoliation of evidence. Commonly, this allows the claimant to argue that, had the evidence been maintained, it would have been unfavorable to the defense. This is frequently referred to as a negative inference, which increases the potential for liability. The court may also grant monetary sanctions and, in rare cases, enter judgment in the claimant’s favor.  

Delayed Reporting May Impact Coverage 

Most liability policies include specific language requiring the prompt reporting of claims. Such language typically provides that the insured must see that the carrier or the insured’s agent/broker is notified as soon as possible of an accident or bodily injury. For the reasons above, untimely reporting materially disadvantages the carrier. Depending upon the extent of the disadvantage, which may include the entry of default or significant spoliation sanctions, the carrier may deny coverage. In such a case, the owner and/or property manager could have personal exposure.  

Conclusion 

The more time that elapses between an incident and reporting, the more difficult it becomes for the liability carrier to investigate and, if a claim is asserted, achieve the most favorable resolution. As such, where a property owner learns of an incident, even if not formally presented by a claimant, immediately notifying the carrier is essential.  

CIBA Insurance Services, and its in-house professionals at Claims Adjusting Group (“CAG”) and CP Law Group, continues to achieve outstanding results on behalf of its clients and brokers. However, this requires timely collaboration, which can only occur with the prompt reporting of claims. Together, we can work toward continued excellence.

The clock is ticking, do not let the time run out.    

CIBA Accounts: To Report a Claim, contact CAG ASAP: 

Business Hours: 9:00 AM - 5:00 PM PST 

Phone: 818-638-8534 

Fax: 818-638-8530 

Email: claims@claimsadjustgrp.com 

After Hours/Holidays: 818-645-1079 

Article Written by Jonathan Wallack, Esq.

For more information, please contact Jonathan Wallack , Esq. at (480) 667-7385 and/or jwallack@cplawgrp.com. 

About CIBA Insurance Services

Our journey began in 1993 when a forward-thinking property development manager sought innovative insurance solutions. Over the years, we've transformed into a prominent E&S insurance program recognized across the market for robust coverages and unwavering service stability, consistently evolving our solutions to meet the dynamic demands of the industry, our valued partners, and our esteemed clients