ILNews

DTCI: Insurance policies' notice provision

Back to TopE-mailPrint

 

James Strenski By James P. Strenski

A number of recent Indiana cases have addressed the provision found in nearly all insurance policies that requires an insured to provide its insurer with prompt notice of a claim.While these cases have clarified the legal framework within which to assess a defense based on late notice, these cases still leave unanswered the question of sufficiency of the evidence required under the framework.This article will explore Indiana law interpreting the late notice provision and where this law leaves practitioners, both for the insured and the insurer.

I. The Notice Provision

Almost all insurance policies contain a notice provision in the “Conditions” section of the policy.An example of such language is as follows:

A. YOUR DUTIES AFTER ACCIDENT OR LOSS:

1. You must promptly notify us or our agent of any accident or loss.You must tell us how, when and where the accident and loss happened.You must assist in obtaining the names and addresses of any injured persons and witnesses.

The issue then becomes (1) when is notice “prompt” or “late” and (2) does the insurer have to show prejudice due to the late notice of a claim to be relieved of liability under the policy?

II. Historical Indiana Law on the Notice Provision

The first issue is what constitutes sufficient notice.Myriad Indiana cases over the years have interpreted various notice provisions to require an insured to provide “reasonable notice” of a claim to an insurer.See Miller v. Dilts, 463 N.E.2d 257, 263 (Ind. 1984) (holding that “promptly notify” requires an insurer to provide “reasonable” notice); Erie Ins. Exch. v. Stevenson, 674 N.E.2d 607, 611 (Ind. Ct. App. 1996) (holding that notice “as soon as possible” requires “reasonable” notice); Hartford Accident & Indem. Co. Hartford, Conn. v. Armstrong, 127 N.E.2d 347, 350 (Ind. Ct. App. 1955) (concluding that notice “as soon as practicable” requires “reasonable” notice); Employers Liab. Corp. v. Light, Heat & Power Co., 63 N.E.2d 54, 56 (Ind. Ct. App. 1902) (holding that “immediate” notice requires “reasonable” notice).If the facts of the case are undisputed, then what constitutes reasonable notice is a question of law for the court to decide.Askren Hub States Pest Control Servs., Inc. v. Zurich Ins. Co., 721 N.E.2d 270, 278 (Ind. Ct. App. 1999).While a number of Indiana courts have found notice to be unreasonable as a matter of law when notice was given a year or more after the occurrence, some courts have also held that a delay of months between the occurrence and the notice to the insurer can be unreasonable as a matter of law.See, e.g., Askren Hub, 721 N.E.2d at 278 (holding that a delay of six months before notifying the insurer of the occurrence constitutes unreasonable notice as a matter of law); Miller, 463 N.E.2d at 266 (entering summary judgment in favor of three insurance companies that received notice of the accidents giving rise to liability one month, six months, and seven months after their occurrence).

Once unreasonable notice has been established, then the issue of prejudice to the insurer due to the late notice must be addressed.The traditional legal framework with which to analyze an insurer’s prejudice due to unreasonable notice was articulated by the Indiana supreme court in Miller.463 N.E.2d 257.In that case, the court distinguished the notice provision from the cooperation provision found in policies, which under existing Indiana case law, requires the insurer to show actual prejudice from an insured’s noncooperation before the insurer is relieved of liability under the policy.Id. at 265.In doing so, the supreme court noted that notice is a threshold requirement that must be met before an insurer is even aware that a controversy or matter exists that requires the cooperation of the insured.Id.As such, the notice requirement was found to be material and of the essence of the contract.Id.The supreme court then went on to state the standard for analyzing a late notice claim as follows:

The requirement of prompt notice gives the insurer an opportunity to make a timely and adequate investigation of all the circumstances surrounding the accident or loss.This adequate investigation is often frustrated by delayed notice.Prejudice to the insurance company’s ability to prepare an adequate defense can therefore be presumed by an unreasonable delay in notifying the company about the accident or about the filing of the lawsuit.This is not in conflict with the public policy theory that the Court should seek to protect the innocent third parties from attempts by insurance companies to deny liability for some insignificant failure to notify.The injured party can establish some evidence that prejudice did not occur in the particular situation.Once such evidence is introduced, the question becomes one for the trier of fact to determine whether any prejudice actually existed.The insurance carrier in turn can present evidence in support of its claim of prejudice.Thus, both parties are able to put forth their respective positions in the legal arena.

Id. at 265-66.Thus, once notice has been established to be unreasonable as a matter of law, then a presumption of prejudice exists, and it is incumbent upon the insured to rebut the presumption.See id.The insurer in turn can present evidence in support of its claim of prejudice.Askren Hub States Pest Control Servs., Inc. v. Zurich Ins. Co., 721 N.E.2d 270, 279 (Ind. Ct. App. 1999).

III. Recent Indiana Law on the Notice Provision

The legal framework articulated by the Miller court was called into question due to the supreme court’s holding in Morris v. Economy Fire & Casualty Co., 848 N.E.2d 663 (Ind. 2006).In Morris, the supreme court held that an insured’s duties under the “Conditions” section of a policy (which in Morris included the insured’s duties to show damaged property, to provide the insurer with records and documents, and to submit to an examination under oath) were separate and distinct from the cooperation provision, and that prejudice is not a consideration in determining the enforceability of the policy’s conditions.848 N.E.2d at 666.Since the notice provision is typically found in the “Conditions” section of a policy, a question arose regarding whether the Morris holding was a shift away from the Miller framework, which imposed a rebuttable presumption of prejudice on late notice claims.The Indiana Supreme Court in Dreaded, Inc. v. St. Paul Guardian Insurance Co., 904 N.E.2d 1267, 1271 (Ind. 2009) recognized this inconsistency when it stated:

Governing Indiana caselaw is inconclusive regarding the necessity and function of prejudice in evaluating an insurer’s alleged failure to perform when its insured fails to comply with the policy notice requirement.

Id. at 1271.However, the Dreaded court declined to address the inconsistency as it distinguished the issue presented (when an insurer’s duty to defend is triggered) from the issues presented in Miller and its progeny (where the insurer is attempting to disclaim all liability under a policy due to late notice).See generally 904 N.E.2d 1267.Correspondingly, the Dreaded court found that under the facts of its case, prejudice was irrelevant.Id. at 1273.

The supreme court addressed the apparent inconsistency between Miller and Morris in its decision, Tri-Etch, Inc. v. Cincinnati Insurance Co., 909 N.E.2d 997 (Ind. 2009).In Tri-Etch, the court affirmed the legal framework articulated in Miller regarding late notice as it stated:

We do not take Morris to alter the holding in Miller.Both Morris and Miller specifically distinguished breach of the policy provision in question in their cases from breach of a general cooperation clause, which does require that the insurer show prejudice to defeat coverage.The quoted language in Morris applies to some, but not necessarily all provisions in the policy “other” than the duty to cooperate.Miller specifically addressed late notice, and held that prejudice to the insurer is presumed by the insured’s late notice, but the insured may rebut the presumption with evidence showing the late notice created no prejudice.The parties have presented this case as one governed by Miller, and we affirm its holding today.

909 N.E.2d at 1005.In addition to affirming the legal framework articulated in Miller for late notice claims, the Tri-Etch court also commented on what an insured must show in terms of evidence of nonprejudice to rebut the presumption.Id.The court, in reversing the court of appeals, held that an insurer’s denial of coverage on other grounds does not rebut the presumption of prejudice from the late notice.Id.In so holding, the Tri-Etch court reasoned:

There is no reason why an insurer should be required to forego a notice requirement simply because it has other valid defenses to coverage.If there is no prejudice to the insurer from lack of notice, the absence of prejudice does not arise from the insurer’s taking the position that it also has other valid defenses to coverage.Rather, it arises from the insurer’s taking no action with respect to the claim because of its other defenses.Even if an insurer consistently denies coverage, timely notice gives the insurer an opportunity to investigate while evidence is fresh, evaluate the claim, and participate in early settlement.The fact that an insurer asserts other coverage defenses does not render these opportunities meaningless.It is a fact issue whether other defenses would have caused the insurer, if given timely notice, to do nothing with respect to the claim.However, because we find Cincinnati’s policies did not apply to this claim, we do not consider whether Tri-Etch’s notice was late or, if so, whether the late notice prejudiced Cincinnati.

Id. at 1005-1006.Thus, while the Tri-Etch court did not directly address the sufficiency of evidence under the Miller framework, it did comment that an argument that the insurer denied the claim on other grounds is, standing alone, insufficient to rebut the presumption of prejudice due to late notice.See id.

The next Indiana case to address the sufficiency of evidence under the Miller framework is Indiana Farmers Mutual Insurance Co. v. North Vernon Drop Forge, 917 N.E.2d 1258 (Ind. Ct. App. 2009), reh’g denied, transfer denied.North Vernon involved an environmental claim in which the insured deposited contaminated fill dirt on another entity’s land after representing that the dirt was clean.917 N.E.2d at 1264.The recipient of the contaminated fill dirt eventually brought suit against North Vernon.Id. at 1262.North Vernon’s insurer, Indiana Farmers, then filed a declaratory judgment action seeking a declaration of no coverage under North Vernon’s CGL policy on a number of grounds, one of which was that North Vernon’s late notice to Indiana Farmers relieved it of liability under the policy.Id. at 1265.

The court, after finding that North Vernon’s notice to Indiana Farmers was unreasonable as a matter of law, turned to the issue of prejudice.Id. at 1275.The court held that the evidence designated in the case rebutted the presumption of prejudice as a matter of law as North Vernon safeguarded Indiana Farmers’ interests by cooperating with IDEM and complying with the August 2006 Notice of Violation.Id. at 1276.The court also distinguished the case at issue from an automobile accident or arson case, where the litigants need to produce percipient witnesses, collect transient physical evidence, and reconstruct instantaneous events.Id.Finally, the court addressed Indiana Farmers’ argument that it was prejudiced because the scope of contamination and IDEM-mandated cleanup increased in the time it went unnotified.The court characterized this argument as bearing on the extent of Indiana Farmers indemnification and not on its prejudice in defending North Vernon from liability in the underlying suit.Id.With this distinction in mind, the court held that the unreasonably late notice did not bar coverage under the Indiana Farmers policy as a matter of law.Id.

The most recent case to examine the sufficiency of evidence of prejudice under the Miller framework is P.R. Mallory & Co., Inc. v. American Casualty Co. of Reading, PA, 920 N.E.2d 736 (Ind. Ct. App. 2010), transfer denied.P.R. Mallory is another environmental case concerning contamination that occurred at the site owned by a series of insureds over a number of decades in Attica, Indiana.920 N.E.2d at 739.One of the defenses raised by the insurers was late notice of the claim, and they eventually moved for summary judgment, seeking a bar of coverage under the issued policies.Id. at 744.The court in P.R. Mallory, after finding that the insureds’ notice to the insurers was unreasonable as a matter of law, addressed the issue of prejudice.Id. at 753-54.On this topic, the court followed the holding in Tri-Etch, and concluded that the fact that the insurers maintained there was no coverage on other grounds did not rebut the presumption that they were prejudiced by the untimely notice of the claim.Id. at 754.The court then addressed the insureds’ argument that the insurers’ own expert praised the investigatory and remedial work being performed at the site by the environmental consultant that had been hired by the insured subsequent to notice to the insurers.Id. at 755.The court found this evidence to be insufficient to rebut the presumption of prejudice as it stated:

Even assuming that this statement came from ACC and CCC’s [the insurers’] expert and the statement refers to CRA [the insureds’ consultant], we cannot say that this statement regarding the performance of a consulting firm hired years after the pollution and after ACC and CCC were notified constitutes evidence that prejudice did not occur.

Id.Because the insureds failed to present evidence to rebut the presumption of prejudice, the court in P.R. Mallory went on to find that summary judgment on behalf of the insurers was appropriate.Id. at 756.

IV. Conclusion

Recent Indiana jurisprudence on the issue of an insured’s late notice of a claim to its insurer has clarified the legal framework to be used for such a defense.As per the holding in Tri-Etch, we know that the rebuttable presumption framework articulated in Miller v. Dilts is still the law of the land.However, questions regarding what evidence is sufficient to rebut the presumption of prejudice and what evidence is sufficient to show prejudice after the presumption has been rebutted remain open.The court of appeals’ holding in North Vernon found that the insured’s cooperation with IDEM and promptly complying with the notice of violation to be sufficient evidence to rebut the presumption.The court also found that the insurer’s argument that it was prejudiced because the scope of contamination increased in the time it went unnotified to be lacking.In contrast, the court of appeals in P.R. Mallory held that evidence that the insurers’ own expert praised the investigatory and remedial work being performed by the insured’s environmental expert to be insufficient, and thus found that the insureds failed to rebut the presumption of prejudice as a matter of law.Transfer was denied by the supreme court in both North Vernon and P.R. Mallory.As a result, counsel for both insureds and insurers are left to speculate regarding what evidence is sufficient to rebut the presumption of prejudice and to show prejudice after the presumption has been rebutted.It will likely take additional cases on this matter to resolve this issue and provide greater clarity and guidance to counsel that practice in this area.•

Mr. Strenski is a partner in the Indianapolis firm of Cantrell, Strenski & Mehringer and is a member of the DTCI Insurance Coverage Section.The opinions expressed in this article are those of the author.

ADVERTISEMENT

Sponsored by

facebook - twitter on Facebook & Twitter

Indiana State Bar Association

Indianapolis Bar Association

Evansville Bar Association

Allen County Bar Association

Indiana Lawyer on Facebook

facebook
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. Am I the only one who sees that the City is essentially giving away the MSA site AND giving millions to build new buildings on the site when this site would be the perfect place for the Justice Complex? Across from City-County, check; keeping it centrally located, check, etc. It's my understanding that the GM site must be purchased by the City from Motors Liquidation Company. STOP WASTING WHAT WE ALREADY HAVE AND OUR TAX DOLLARS! The Ballard Administration has not been known for it's common sense...never voted for him and never will!

  2. This guy sounds like the classic molester/manipulator.

  3. Louis D. Brandeis was born in 1856. At 9 years of age it would have been 1865. The Brandeis family did not own slaves. My source Louis D. Brandeis: A Life, by Melvin L. Urofsky.

  4. My name is Matthew Lucas Major, I recently went through a jury trial in Bloomington , In. It was the week of Feb 19-21. Although I have been incarcerated since August 5, 2014. The reason I 'am writing to you sir is on the 21 of February the jury came in with a very excessive and wrongful verdict of guilty on 6 child molesting charges against my daughter who was 9 at the time I was accused. I also had 2 other Felonies one of Intimidation and 1 of Sexual Vicarious Gratification. Judge Marc Kellam on the second day of trial gave me a not guilty on those 2 felonies. The jury was sent out during that time and when brought back Judge Kellam told them to not concern themselves with the 2 Felonies that he ruled on them. They were told to not let evidence they had already heard influence there verdicts. I never in my life touched any child sexually and definitely not with my own daughter. When I was arrested Detective Shawn Karr told me I would be convicted guilty just on my daughters word even without evidence. That's just what happened. my public defender did me so wrong he never once proved to the court and jury all the lies the child told, and Jeremy Noel my public defender could of proven the lies easily. The stories in Serenity's depositions and Forensic interview changed and were not consistent as Prosecutor Darcie Fawcett claimed they were. Yet my attorney never mentioned that. The facts that the child accused me of full penetration in her vagina and rectum was proven lies. Doctor Roberta Hibbard of Riley hospital in Indianapolis confirmed Serenity's hymen intact, no scars, no tearing, no signs of rape to her. Yet my attorney didn't use that knowledge . the DNA was all in my favor. I tell you I will spend my entire life in prison going through rape and beatings etc. even Judge Kellam abused his authority by telling the jurors to listen and believe what the prosecutors side in evidence like my daughters testimony. In one interview with the detectives my daughter got flustered with her mom and said on camera " I'm saying what you told me to mom"!! Yet Mr. Noel said nor did anything to even resemble a defense attorney. Judge Kellam allowed edited version of a taped conversation between the child and her mother. Also Judge Kellam allowed the Prosecutor too bring in to my case a knife found under my seat, the knife wasn't part of my case. She was allowed by my attorney and the judge to put a huge picture of it on the screen and huge picture of my naked privates in a full courtroom and open court. Ms. Fawcett says to jury see how easy Mr. Major could reach the knife and cut his Childs throat. Even though I had no weapons charge against these cases. This gave the jurors prejudice thought against me thinking I threatened her with that knife and how scared she would of been knowing i could get it and kill her. On my sentencing court March 19, 2014 my public defender told Judge Kellam he wish to resign from being my attorney and wished for the court to give me outside council to file a error to trial or appeal. We were denied. Now after openly knowing my public defender don't want to represent me he has to. Well when as parents we make our kids clean a room when they really don't wish to, well the child will but don't mean she will do a good job, that's where I'm at with Mr. Noel. please dont ignore mine and my families pleas for your help . we have all the legal proof you could need to prove Im innocent. Please dont make my spend years in prison innocent when you can fix this wrong. Im not saying Im a perfect man or that I was a perfect dad to my 2 children none of us are. Ive made some bad choices in life and I paid for them. But I didnt ever touch or rape my daughter . I love my children with all my heart. And now through needing attention and a ex-wife who told my granny several times she wish she could put me in prison to get me out of their lives. Well my ex finally accomplished her goal. Sad part is she is destroying our daughter with all this horrific lies and things she taught my daughter to say. My daughter will need therapist to ever hope for a chance of a normal life after what she had done to her by her mom and their side of the family. My daughter told everyone even on stand she had a dream months before i supposedly molested her in this dream I was molesting her and when I finally did it matched her dream perfectly. She admitted to watching movies about little girls being molested and watching U-Tube videos about child molesting all before it happened supposedly to her. Doesn't that sound very unusual that a non molested 9 yr old would need to know so much about being molested? The only reason I could think a 9 year old would need so much information is to be prepared to know what to say and be able to say how it felt what took place etc.. So when questioned by authorities she would be prepared. And there again sir if a parent is pre grooming a 9 year old child she would need intimate details . Like telling her daughter about a couple moles on my private area. The child admitted to sneaking my cell and looking many many times at nudes of me and my girlfriend even one where my penis was entering my girlfriends vagina. In that picture my moles are obvious. Yet when prosecutor showed everyone in court my privates and pictures of the moles she said the only way the child would know about them is if she saw them for herself. My attorney once again said nothing about the pictures my child saw. Or could a ex-wife be able to describe my moles to help her case against getting rid of me? I beg you help me. This is my very existence. Ive lost everything , a good job, a wonderful girlfriend, my freedom, but worse thing Ive lost is my children. They were my reason to get up every morning and strive to be better. The wonderful bond I had with my Serenity is gone. After this I would be afraid to even hug her for fear of what next can they do to me. I'm not afraid to tell you I sit here in this cell and try to hold back my tears. Everyone knows you cant show weakness in prison. My life has already been threatened here at Wabash Valley Prison. After only 3 days of arrival. I was tricked into signing a waiver now Im in G Block General Population with 6 child molesting felony charges. Mrs. Hart as a 18 year old I almost died hooked to machines in hospital almost 1 month and now I know that fear was childish compared to this . I cant help but put emotions in this, after all Mrs. Hart Im human and God help Me I never been more afraid in my life. I didnt hurt my little girl I didnt touch her sexually. As much as it shreds me and fills my mind what Im facing I worry more about my mom and granny because of their great love for me mam they are suffering so deeply. I aint done this things but my loved ones suffering right along beside me and If you take my case you will be in essence freeing them also. I sent momma this letter and asked her to email it to you. I'm scared I have been done so unjustly by our legal system and I need you to fix this and give me freedom. I ask you please don't just ignore my pleas. Here in America its nice to be able to trust our legal justice system, well they destroyed my and my loved ones trust in our justice system . And I'm trusting in You !!! My entire family is suffering this nightmare with me. My 77 year old granny had a stroke and isn't doing so well. My single mother that raised 3 kids alone is dying from Lupus and since my arrest has stayed so sick and weary. Our lives torn to peices by a government I was taught I could trust in. my momma has tried so many innocent project and wrongfully accused and cant get anywhere. please please help me. A quote from the late Nelson Mandela: To be free is not merely to cast off ones chains, But to live in a way that respects and enhances The Freedom Of Others. I have Faith in you and your clinic to cast my chains off and give me freedom I do deserve as a wrongfully accused Man, son, brother, father, friend. Matthew Major DOC# 246179 Cause # : 53c02-1308-FA-000779 God Bless you. Please contact me with your decision so I know you made a life changing decision for me , just please at least write me so I know you care enough about your citizens to respond to cries for your help. You can speak openly with my mother Charlotte Spain (828) 476-0406: 71 Lakeview Dr. Canton, NC 28716 Thank You Matthew Major I know yall get thousands of request and inmates claiming innocence, and each person who are innocent deserve to have organizations like yours willing to fight for them and I give yall so much Thanks and I thank God everyday yall are out there caring enough to help free the innocents. Since discovering firsthand how easily lives and families can be destroyed by Poor Defense attorneys not doing their job . And Prosecutors allowed to do as they please in court

  5. Frankly, it is tragic that you are even considering going to an expensive, unaccredited "law school." It is extremely difficult to get a job with a degree from a real school. If you are going to make the investment of time, money, and tears into law school, it should not be to a place that won't actually enable you to practice law when you graduate.

ADVERTISEMENT