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The Supreme Court of Indiana ruled in a unanimous decision on April 28, 2009 that an insurer had no duty to defend where its policyholder did not comply with the policy’s notice provision. Where the notice provision had required the insured to “Tell us or our agent what happened as soon as possible,” and yet the insured had waited three and a half years to notice its insurer of environmental damage claims against it, the court found that no duty to defend under the policy existed.

In the case styled Dreaded, Inc. v. St. Paul Guardian Insurance Co.,the insured sought to have its pre-notice defense and environmental investigation costs reimbursed under the several general liability insurance policies it had purchased from St. Paul during the time that releases of contaminants had occurred. The Supreme Court stated that the notice provision of the St. Paul policy was a “threshold requirement for coverage,” and thus a condition precedent of the insurance contract.The policyholder had argued that the insurer must show that it had been prejudiced by its delay in providing notice. The Court found that such an analysis was prematuresince no duty to defend would arise under the terms of the policies until the policyholder complied with the terms of the notice provision.

This decision heightens the need for Indiana companies who think they may one day need to file long-tail property damage claims under their old commercial liability insurance policies to be pro-active. The time to locate and retrieve these policies is now. Waiting until the letter from the environmental authorities arrives to begin the search for policies can place millions of coverage dollars at risk. And filing a claim after a lengthy delay to locate the policies can, under this Indiana decision, be fatal.

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