Events requiring notice to the underwriters: Overview, definition, and example
What is an event requiring notice to the underwriters?
An event requiring notice to the underwriters refers to specific situations or occurrences that must be communicated to the insurance underwriters during the term of an insurance policy. Underwriters are responsible for evaluating the risks involved in issuing an insurance policy and determining the terms and premiums. If certain events occur—such as a change in the insured's business operations, the occurrence of a claim, or other significant changes—they must be reported to the underwriters to ensure that the coverage remains valid and appropriate.
These events are typically outlined in the insurance policy and may require the insured party to notify the underwriters within a specified period.
Why are events requiring notice to the underwriters important?
Events requiring notice to the underwriters are important because they help ensure that the insurance policy reflects the current risks and that the coverage remains valid. Failing to notify underwriters of a relevant event could result in a claim being denied, reduced, or delayed, or could even void the insurance policy entirely. By promptly notifying underwriters of any events that could affect the risk, the insured ensures continued protection and compliance with the terms of the policy.
For businesses, keeping underwriters informed helps mitigate the risk of insufficient coverage or complications if a claim arises.
Understanding events requiring notice to the underwriters through an example
Imagine you own a factory and have an insurance policy covering potential damage to the property and machinery. If you decide to expand the factory or increase production capacity, this could increase the risk covered by the policy. In such a case, the insurance policy may require you to notify the underwriters of the expansion so they can assess whether the coverage needs to be adjusted.
In another example, suppose your business experiences a major fire that causes damage to your property. The policy may require that you notify the underwriters within 48 hours to ensure that the claim is processed and the coverage applies. Failing to notify them within the timeframe could result in the claim being denied or reduced.
Example of an events requiring notice to the underwriters clause
Here’s what a clause regarding events requiring notice to the underwriters might look like in an insurance agreement:
“The Insured shall notify the Underwriters within [specified number of days] of any event that may affect the risk covered by this policy, including but not limited to: changes in the nature of the insured operations, any claims or incidents that could lead to a claim, or any material changes to the insured property. Failure to notify the Underwriters within the required timeframe may result in a denial of coverage or adjustment of the policy terms.”
Conclusion
Events requiring notice to the underwriters ensure that insurance coverage remains appropriate and effective in the face of changing risks. By notifying the underwriters of any relevant events, businesses can maintain proper coverage and avoid complications when filing claims. Clear communication with underwriters helps ensure that the policy reflects current operations and risks, providing ongoing protection for the business.
Including such a clause in your insurance agreement helps prevent issues down the road, ensuring that you’re always properly covered when you need it most.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.