Notice: Prejudice Rule

COMMISSIONER OF SECURITIES & INSURANCE MONICA J. LINDEEN COMMISSIONER OFFICE OF THE MONTANA STATE AUDITOR # ADVISORY MEMORANDUM To: ALL INTERESTED INSURERS From: MONICA J. LINDEEN – Montana State Auditor, Commissioner of Securities and Insurance Date: August 17, 2016 NOTICE-PREJUDICE RULE PLEASE TAKE NOTICE that in The Estate of Gleason et al. v. Central United Life Insurance Company et al., 2015 MT 140, ¶ 39, 379 Mont. 219, 350 P.3d 349, the Montana Supreme Court explicitly adopted the notice-prejudice rule, and extended the rule to all first party insurance claims. In Atlantic Casualty Insurance Company v. John P. Gretak et al., 2015 MT 149, ¶ 16, 379 Mont. 332, 350 P.3d 63, the Court held that the notice-prejudice rule likewise applies to third party claims. Pursuant to the notice-prejudice rule, an insurer may not deny coverage for late notice of a claim unless the insurer can demonstrate that it was injured or prejudiced by the lateness of the claim. Estate of Gleason et al., at ¶ 33. The notice-prejudice rule does not require taking proof of claim time limits out of policies. It only limits the circumstances under which a failure to comply with the time limit can be the basis of a denial of policy benefits. All insurance practices must conform to the notice-prejudice rule. For any questions regarding this advisory memorandum, please contact the Office of the Montana State Auditor, Commissioner of Securities and Insurance, Legal Services Bureau at (406) 444-2040. Phone: 1-800-332-6148 / (406) 444-2040 / Main Fax: (406) 444-3497 Securities Fax: (406) 444-5558 / PHS Fax: (406) 444-1980 / Legal Fax: (406) 444-3499 840 Helena Ave., Helena MT 59601 Website: www.csi.mt.gov E-Mail: csi@mt.gov