Gulf Oil Disaster Insureds Warned of Claim Notification Deadline

Insureds facing the possibility of losses from the BP oil disaster in the Gulf of Mexico were recently advised to submit their written notice to their insurance carriers as soon as possible to make sure they comply with notice provisions in their insurance policies.

Global insurance broker Marsh said that insurers are indicating that they will strictly interpret any 80-day notice provisions in policies. Thus insureds should consider the April 20 date of the Deepwater Horizon explosion as the start date for calculating the notice provision, and should have provided notice by July 8, according to Marsh.

Marsh said that several carriers indicated that they will enforce time limits strictly, without weighing the date the insured first became aware of any potential exposure.

Also, Marsh said that some excess liability carriers are planning on adding “broadly worded, event-specific exclusions to their 2010-2011 policies to prospectively eliminate coverage for the Deepwater Event.” Thus if an insured files notice in order to comply with the time limit, “it is likely that the carrier will attempt to limit its exposure prospectively via an endorsement that excludes the Deepwater Event,” Marsh said.

If a client chooses not to notice the Deepwater Horizon event at this time, the insurer may strictly enforce the time deadline. Marsh said it is urging carriers to withdraw or narrow these exclusions, but warns that “this is an emerging market trend that raises concerns” with respect to 2009-2010 policies and raises questions about whether claims should be notified.