Untimely Notice Does Not Remove Insurer From Its Duty To Indemnify

In a recent decision, the South Carolina Supreme Court refused to expand the "notice-prejudice rule" but still found that an insurer could not deny coverage based upon the insured's failure to provide timely notice of an underlying lawsuit because the insured did not materially breach the insurance policy.

Covil Corporation v. Pennsylvania National Mutual Casualty Insurance Company arose from an underlying lawsuit involving asbestos-related illness. Covil Corporation (Covil) waited almost a year before providing notice of the lawsuit to Pennsylvania National Mutual Casualty Insurance Company (Penn National). By the time Covil finally provided notice to Penn National, mediation in the underlying lawsuit was less than 30 days away. Though Penn National attended mediation and showed a willingness to contribute to a possible settlement, the company ultimately did not do so.