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Insurer entitled to deny coverage on late claim: Court

Insurer entitled to deny coverage on late claim: Court

Submitting an insurance claim more than seven months after a lawsuit has been filed is not “as soon as practicable,” says a federal appeals court in upholding a Nationwide Group unit’s coverage denial.

Robert Spinner, a former employee of wholesale distributor Minneapolis-based Food Market Merchandising Inc., sued the firm in January 2014, seeking unpaid commissions, in a lawsuit that was eventually settled, according to Thursday’s ruling by the 8th U.S. Circuit Court of Appeals in Cincinnati in Food Market Merchandise Inc., a Minneapolis corporation. v. Scottsdale Indemnity Co.

Food Market notified its insurer Scottsdale, a unit of the Columbus, Ohio-based Nationwide Group, of the lawsuit in August 2014, which was during the policy period, according to the ruling.

The notification provision of the coverage section at issue said the insurers must be give written notice of any claim “as soon as practicable, but in no event later than sixty (60) days after the end of the policy period.”

After Scottsdale tentatively denied coverage, Food Market filed suit in U.S. District Court in Minneapolis on charges of breach of contract, breach of the covenant of god faith and fair dealing and declaratory judgment.

Scottsdale formally denied coverage a week later, stating Food Market’s notice was untimely and the claim outside the policy’s scope, said the ruling.

The District Court granted Scottsdale summary judgement dismissing the case, which was unanimously affirmed by a three-judge appeals court panel on appeal. “Food Market believes its notice was timely because it had a ‘claims-made policy’ and gave notice within the claims period,” said the ruling.

However, said the ruling, “Food Market presented no evidence that providing notice over seven months after Spinner sued was ‘as soon as practicable,” said the ruling, in affirming the lower court ruling.



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