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Insurer needs notice of claim to defend it

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An insurer can't defend a claim of which it has no knowledge and its duty to defend doesn't begin until it receives basic notice information to allow it to defend a claim, ruled the Indiana Supreme Court. The high court affirmed today summary judgment in favor of an insurer on the question of when its duty to defend began in an environmental claim filed by a policy holder because the duty to defend didn't begin until the policy holder complied with the policy's notice requirement.

The question in Dreaded Inc. v. St. Paul Guardian Insurance Co., et al., No. 49S02-0805-CV-244, is whether St. Paul Guardian Insurance was liable for environmental damage claims against Dreaded Inc. that it was unaware of for more than three years. Dreaded received notice from the Indiana Department of Environmental Management requiring it to investigate contamination at a former business site. Dreaded notified St. Paul of the IDEM claim 3 ½ years later and asked St. Paul to take up its defense and reimburse the company for defense costs incurred up to that point. St. Paul agreed to defend Dreaded beginning at the point it received notice, but not for the 3 ½ years prior to receiving notice. Dreaded filed suit seeking declaratory relief establishing St. Paul's duty to fully defend and indemnify against the IDEM action and damages from the breach of contract of St. Paul's duty to defend. St. Paul countered it required prompt notice of damage claims and it wasn't liable for payments made without its consent. The Indiana Court of Appeals reversed summary judgment in favor of St. Paul.

Dreaded argued on appeal it's entitled to recover its pre-notice defense costs unless St. Paul can prove it was prejudiced by the company's late notice and St. Paul failed to present evidence showing actual prejudice. However, the facts of this case will result in the same outcome regardless of whether St. Paul has to show it was prejudiced, wrote Justice Brent Dickson. Dreaded's claim for damages is predicated solely on its contention St. Paul breached its duty to defend them against a claim or suit for injury or damage covered by their policy.

But an insurer can't defend a claim if it doesn't know about, and until it receives the basic information needed to allow it to defend a claim, the insurer can't be held accountable for breaching this duty, wrote the justice. St. Paul's duty to defend didn't arise until Dreaded complied with the policy's notice requirement, so the insurer is entitled to summary judgment as a matter of law.

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  1. KUDOS to the Indiana Supreme Court for realizing that some bureacracies need to go to the stake. Recall what RWR said: "No government ever voluntarily reduces itself in size. Government programs, once launched, never disappear. Actually, a government bureau is the nearest thing to eternal life we'll ever see on this earth!" NOW ... what next to this rare and inspiring chopping block? Well, the Commission on Gender and Race (but not religion!?!) is way overdue. And some other Board's could be cut with a positive for State and the reputation of the Indiana judiciary.

  2. During a visit where an informant with police wears audio and video, does the video necessary have to show hand to hand transaction of money and narcotics?

  3. I will agree with that as soon as law schools stop lying to prospective students about salaries and employment opportunities in the legal profession. There is no defense to the fraudulent numbers first year salaries they post to mislead people into going to law school.

  4. The sad thing is that no fish were thrown overboard The "greenhorn" who had never fished before those 5 days was interrogated for over 4 hours by 5 officers until his statement was illicited, "I don't want to go to prison....." The truth is that these fish were measured frozen off shore and thawed on shore. The FWC (state) officer did not know fish shrink, so the only reason that these fish could be bigger was a swap. There is no difference between a 19 1/2 fish or 19 3/4 fish, short fish is short fish, the ticket was written. In addition the FWC officer testified at trial, he does not measure fish in accordance with federal law. There was a document prepared by the FWC expert that said yes, fish shrink and if these had been measured correctly they averaged over 20 inches (offshore frozen). This was a smoke and mirror prosecution.

  5. I love this, Dave! Many congrats to you! We've come a long way from studying for the bar together! :)

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