What is the purpose of the Notice of Claim clause in CGL?

• A. It allows the insured to extend the policy to new locations.
• B. It requires the insured to promptly notify the insurer of a claim or suit so the insurer can investigate and defend.
• C. It requires the insurer to provide free legal counsel regardless of notice.
• D. It allows the insured to settle claims without insurer involvement.

Answer: (B)

Prompt notice of a claim to the insurer is essential because this duty triggers the insurer’s ability to step in, investigate, and defend a covered claim. In a Commercial General Liability policy, the insurer has a duty to defend and pay defense costs for covered suits, and timely notice lets the insurer gather facts, preserve evidence, and coordinate the defense effectively. If notice is delayed, the insurer may be prejudiced and coverage could be jeopardized, or the insurer may be unable to control the defense properly. This clause is not about expanding coverage to new locations, nor does it obligate the insurer to provide free legal counsel regardless of notice, nor does it permit settling claims without insurer involvement.