Most property insurance policies include a provision that requires the insured to provide prompt notice of a loss as soon as possible after a covered loss—known as the notice of claim provision or awareness provision.

An insured’s failure to do so may be a breach of the insurance contract and allow the insurance company (insurer) to deny the claim—meaning the insurer would have no obligation to defend or indemnify the insured against the claim—and may allow the insurer to cancel the insurance policy.

Courts in many states have adopted the Notice-Prejudice Rule, which prohibits an insurer from denying a claim—even when the notice provided by the insurer may not have been prompt—unless the insurer can demonstrate actual prejudice resulting from the delayed notice of loss.

But some courts have held that the failure to notify the insurer within a reasonable time constitutes a breach of the insurance contract—unless there is a justifiable excuse or extenuating circumstances explaining the delay—and the insurer cannot be held liable under the insurance contract to defend the insured and pay any settlements or court judgments on the loss. This is known as the Traditional Notice Rule.

In Hawaii, property insurance policies typically include a clause that mandates the insured to promptly notify the insurer of any loss as soon as possible, which is referred to as the notice of claim provision. If the insured fails to provide timely notice, this can be considered a breach of the insurance contract, potentially leading the insurer to deny the claim and possibly cancel the policy. However, Hawaii courts adhere to the Notice-Prejudice Rule, which means that an insurer cannot deny a claim based on late notification unless it can show that the delay caused actual prejudice to its interests. This rule is more policyholder-friendly compared to the Traditional Notice Rule, which allows insurers to deny claims for late notice without needing to prove prejudice, unless the insured has a reasonable excuse for the delay. Therefore, in Hawaii, the Notice-Prejudice Rule offers a level of protection to insured parties, requiring insurers to demonstrate actual harm from a delayed notice before denying a claim.