The New Jersey Appellate Division recently reaffirmed that it will strictly and rigorously enforce notice provisions under claims-made policies. Put simply, in New Jersey, failure to provide notice of claims under a claims-made policy will result in no coverage.
This may surprise many attorneys since New Jersey is known for using a “prejudice” standard with respect to notice. Under this standard, late notice will only forfeit coverage if the insurer can demonstrate appreciable prejudice, which has proven an extremely difficult standard for insurers. However, this prejudice rule only applies to “occurrence” based policies, typically general liability policies. It has no applicability at all to claims-made policies, which typically includes directors’ and officers’ policies, employment practices policies, and malpractice and errors and omissions policies.
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