The Illinois Supreme Court has upheld an insurance contract law ruling in a case dealing with the issue of timely notice to an insurer of a claim or lawsuit, according to the National Association of Mutual Insurance Companies (NAMIC).

"This is a very fair decision and a positive result for insurers doing business in Illinois. For the Supreme Court to decide otherwise would have turned Illinois insurance contract law on its head," said NAMIC's regulatory affairs counsel Marsha Harrison.

NAMIC had joined with the Illinois Insurance Association in November 2005 to file an amicus brief in the case, Country Mutual Insurance Co. -v- Livorsi Marine, Inc.

"The Supreme Court affirmed the appellate court's conclusion that the insurer did not receive the notice to which it was entitled by contract," Harrison continued. "The appellate court had premised its own decision, in part, on a concession by the insureds that the notice given to Country Mutual was unreasonably and inexcusably late. In applying case law that has been on the books for 50+ years, the Court rejected urgings that it rewrite the rules and not consider all the relevant factors."

"To effectively perform their contractual obligations to a policyholder, insurance companies must be able to investigate claims on a timely basis," said Harrison. "The more time that passes after a claim occurs, the more difficult it is for any interested party, including an insurer, to determine what happened. This is the rationale behind the policy requirement that an insured give timely notice to his insurer of a lawsuit filed against the insurer."

Source: Insurance Journal