Under Maryland law, an insurance company must show actual prejudice in order to deny coverage for a late-reported claim. The prejudice must be actual, meaning tangible, i.e., the insurance company must demonstrate that had the claim been timely reported, the results of the litigation for which the defense coverage is sought. This is called the notice-prejudice rule and it is a majority rule followed by almost every state. It is a rule of fairness that prevents undue forfeiture of contractual rights. In this case, UP urged the court to affirm the decision of the Special Court of Appeals which found that the insurance company's bizarre assertion that had it had notice of a separate lawsuit in which the policyholder was a plaintiff, that was initiated prior to the suit for which the policyholder asked for coverage, it could have somehow changed the outcome, and the fact that it had late notice of the claim (and the unrelated lawsuit) somehow prejudiced it's interests.
"We are so grateful that a consumer-focused organization like UP – completely independent of the insurance industry – is there to help families and individuals, homeowners and renters alike, navigate the confusing claims process after a disaster, and to help them before a crisis as well."