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 Maine, property insurance policies typically include a notice of claim provision, which requires policyholders to promptly notify their insurer of a loss. If an insured fails to provide timely notice, this can be considered a breach of the insurance contract, potentially leading to the insurer denying the claim and possibly cancelling the policy. Maine courts generally follow the Notice-Prejudice Rule, meaning that an insurer must show that the delayed notice caused actual prejudice to their ability to defend the claim or indemnify the insured. If the insurer cannot demonstrate such prejudice, they may not be able to deny the claim solely based on late notification. However, if the notice is not provided within a reasonable time and there is no justifiable excuse for the delay, the insurer may not be obligated to defend or indemnify under the Traditional Notice Rule. It is important for policyholders to understand their obligations under their specific policy and to provide notice as soon as possible to avoid complications with their coverage.