When Is Late Notice Really Too Late?

The Western District of Texas Declines to Impose a Prejudice Requirement on a Fixed-Time Notice Provision in a Commercial Property Policy

Texas is considered a "notice-prejudice" state, meaning that as a general rule an insurer is required to demonstrate it was prejudiced by an insured's late notice of a claim before it can deny coverage, with some notable exceptions. In this context, Texas law is well established on certain points. However, a recent case from the Western District of Texas highlights one area of uncertainty in this body of law.

By way of background, Texas courts distinguish between "claims-made" and "occurrence" policies when construing notice provisions, finding that prejudice may not be required under claims-made policies but that it is generally required under occurrence policies. Texas courts further distinguish between claims-made-and-reported policies and claims-made policies that contain no specific reporting period, finding that a