A former employee has been making noise about filing a lawsuit for months.  You have received letters, emails and calls alleging that termination was improper and seeking resolution of the allegations.  You have not reported anything to your insurance carrier although you have been threatened with a possible lawsuit.  Finally, suit is filed almost a year after the initial allegations were received.  A claim is now made to your insurance carrier for coverage – have you missed your opportunity for coverage by delaying in your reporting of the potential claim to your insurance carrier? 

A recent court of appeal ruling out of the 4th Circuit Court of Appeals ruled that an employer was still entitled to coverage in the circumstances set forth above because the employer never previously received a written demand for specific relief.  Although it is unclear whether a Colorado court would adopt the reasoning set forth in that case, it remains best practice to be familiar with the notice requirements of your insurance policy and to report possible claims to your insurance carrier as soon as you become aware of a potential claim. 

If you would like to discuss potential claims your business may be facing, please contact our Business Law Group partner, David A. Closson at [email protected].

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