Insurance Co. of North America v. Aberdeen Insurance Services, Inc.
253 F.3d 878 | Court of Appeals for the Fifth Circuit | 2001
What This Case Means for Subcontractors
Maitland Brothers, a subcontractor, had its insurance policy canceled without proper notice. The court ruled that when a prime contract requires 30 days' notice before cancellation, that requirement flows down to the insurance company even if the policy itself doesn't explicitly state it. The Fifth Circuit reversed the lower court's decision and held the insurance company liable for failing to provide the required notice before canceling the subcontractor's coverage.
Key Takeaways
- •Always review your prime contract's insurance requirements—they can legally bind your insurance company even if not mentioned in the policy itself
- •Require your insurance broker to confirm in writing that all notice periods and cancellation terms from your prime contract are incorporated into your actual policy
- •If your prime contract requires 30+ days' notice before cancellation, document this requirement and share it with your insurer to prevent surprise policy terminations
Underwriters had duty to provide Maitland thirty days notice prior to cancellation.
Frequently Asked Question
Can my insurance company cancel my policy without notice if my prime contract requires 30 days' notice?
No. If your prime contract requires 30 days' notice before cancellation, that requirement legally binds your insurance company even if the policy doesn't repeat it. Make sure your insurance broker knows about all notice requirements in your prime contract and confirms they're honored in your actual policy.
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