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 North Carolina, property insurance policies typically include a clause that requires the insured to promptly notify the insurer of any losses as soon as possible after they occur. This is known as the notice of claim provision. If an insured fails to provide timely notice, it may be considered a breach of the insurance contract, potentially leading the insurance company to deny the claim and refuse to defend or indemnify the insured. Furthermore, the insurer might have the right to cancel the policy. North Carolina courts have generally followed the Traditional Notice Rule, which means that if an insured does not notify the insurer within a reasonable time and cannot provide a justifiable excuse for the delay, the insurer may not be obligated to cover the claim. Unlike some states that have adopted the Notice-Prejudice Rule, which requires insurers to show actual prejudice from delayed notice before denying a claim, North Carolina's adherence to the Traditional Notice Rule places a stronger emphasis on the insured's obligation to notify the insurer promptly.