When should an insured party report a claim? And when does the limitation period start? These questions are crucial for insurers, as they determine whether a claim falls within coverage and whether it is still valid.
The answers depend on the definition of a claim event. This concept can be interpreted in different ways. In this article, we explain how these interpretations affect the notification obligation and limitation period.
When should an insured party report a claim event?
A claim event does not always occur at a clear moment. There are two main ways to determine when it begins:
- A claim event starts only when there is a legal dispute. The insured must then report the claim event as soon as they require legal assistance, for example, when a counterparty files a claim or when they decide to take legal action themselves.
- A claim event starts as soon as a problem arises that could lead to a legal conflict. In this case, the insured must report the claim event at an earlier stage, even before an actual dispute has arisen.
Which interpretation applies depends on how the claim event is defined in the policy conditions or case law. This also influences how insurers handle claim notifications.
When does the limitation period start?
The limitation period determines how long an insured party has to submit a claim. According to the law, a legal action arising from an insurance contract generally expires after three years. But the key question is: when does this period start?
- Some interpretations state that the limitation period starts only when a legal dispute arises. In this case, the insured may wait longer before filing a claim, as long as no concrete dispute has occurred.
- Other interpretations suggest that the limitation period starts as soon as the insured becomes aware of a potential issue. This means the limitation period could already be running before any legal action is taken.
These different approaches have a significant impact. They determine whether a claim is considered timely or time-barred.
Why is this important for insurers?
The definition of a claim event determines whether a claim falls within coverage and how insurers should handle notifications and limitation periods. A clear interpretation helps prevent disputes and ensures claims are processed correctly.
Would you like to know which approach best suits your policy conditions? Contact Amankwah Law. We provide insurers with expert advice on claim notifications, limitation periods, and legal expense management.
Image by freepik.com