When a loss occurs, the insured has to make a claim for indemnification within a reasonable time absent any provision in the policy that specifies a time frame with in which a claim ought to be made. The first basic obligation of the insured upon the occurrence of a loss is to give notice of the loss to the insured. It should be noted that oral notice is sufficient unless the policy provides otherwise. It should be noted that where time frame for notice has been stated in the policy, the contravention of this condition and failure to comply will entitle the insurer to avoid liability.
In the case of : Cassel v. Lancashire & yorkshire accident insurance company (1885) 1 tlr 495; where an accident policy required notice within 14 days. it was not until 8 months after an accident that the insured became aware that he had been injured as a result of it, and then he gave the notice, but it was held that the insurer was not liable since the insured had not given the insurer notice within the required time frame.
The Notice is essentially informal but may take certain standard format if provided for by the insurer in the policy. The standard format often includes the requirement for the insured to state particulars of the loss. Absent such requirement, the insured shall prove their loss by other means discussed later in the notes.
In addition to the giving of notice, there is need for further cooperation by the insured. This is often stated as a condition in the policy which is strictly enforced to enable the insurer to investigate the validity of the insured’s claim. Failure to further cooperate may enable the insurer to avoid liability.
In the case of London guarantee co v feearnley (1880) 5 app cas. 911 , a fidelity policy taken out by an employer covered him against the risk of embezzlement by an employee. In the policy, there was a condition precedent that provided that if a claim was made, the insured should prosecute the employee concerned if the insurer so required. Following a particular claim, the insured refused to comply with such a request and it was held that the insurer was thereby entitled to avoid liability.
The duty of utmost good faith clearly survives beyond the time of effecting the policy. A claim is fraudulent if it can be shown that the insured intended to defraud the insurer or put forward false evidence when in fact there was no loss. A fraudulent claim will lead the policy to becoming void and all benefits being voided regardless of whether such is expressly stated in the policy or not.
In the case of Galloway v. Royal guardian royal exchange (uk) ltd , the claimant claimed for losses following a burglary. The amount was probably a fair estimation of his losses following a burglary, but he claimed for a computer that had not been in fact lost, and the receipt for its purchase had been forged. He signed a declaration that the particulars given on the claim were true and complete. Despite being convicted of fraud, the claimant sued the insurers who rejected. The court of appeals held that although there was no express clause in the policy barring all recovery in the event of a fraudulent claim, the policy would be treated as if there were such a clause in the policy barring all recovery in the event of a fraudulent claim the policy will be treated as if there was such a clause.
Proof Of Loss:
Usually and as a matter of prudence the insurer shall require the insured to furnish evidence of the loss. This is different from the particulars of the loss that are given in the notice. The proof of loss requires documentary proof of the loss. It should be noted that the furnishing of the evidence of loss is not a guarantee that such shall be covered by the policy. The Insurer may dispute the loss and the matter may be litigated. It should however be noted that in the event the matter is litigated, the Burden of proof lies on the insured.
Measuring the loss and Indemnity:
In the case of a valued policy the measure of loss and indemnity is the value fixed by the policy, which, in comprehensive terms, is the amount decided with the insurers, while in the case of an un-valued policy, the measure of loss and indemnity is the insurable value, the assured cannot recover sums beyond the statutory sums by way of damages from the insurers. The claim under the insurance is legally analyzed as a claim for ascertained damages arising on the happening of the loss . Under English law, by contrast to the position in the United States law, at the moment, there is no secondary obligation of performance that arise from failure to pay on demand which hence entitles the assured to damages for delayed payment or unfair claims handling.