Duty to Defend - Long Delay Before Insurer Is Notified Of Claim

Farmers Auto. Ins. Ass'n v. Burton, 967 NE 2d 329 - Ill: Appellate Court, 4th Dist. 2012 - Google Scholar:

In this case, Farmers was notified of an automobile accident two years after it occurred and only after the insured was convicted of leaving the scene of an accident. The accident (a hit and run accident allegedly) occurred on May 11, 2008. The policyholder did not notify the insurance company until July 8, 2010. That long delay was sufficient to absolve the insurance company of any duty to defend or indemnify.

The court explains:

"¶ 16 In its declaratory judgment action, Farmers alleged it had neither a duty to defend nor a duty to indemnify Burton as a result of the accident because Burton did not provide the company with prompt notice. The insurance policy in question contained a provision requiring the insured to provide prompt notice of any accident or loss. Our supreme court has stated: "A provision in an insurance liability policy requiring an insured to give the insurer notice of an accident is a reasonable policy requirement, one which affords the insurer an opportunity to make a timely and thorough investigation and to gather and preserve possible evidence." Barrington Consolidated High School v. American Insurance Co., 58 Ill.2d 278, 281, 319 N.E.2d 25, 27 (1974)."

The policyholder denied that he was involved in the accident. However, his arrest on charges (in September 2008) that he left the scene of an accident was sufficient to give him notice that he was involved in the accident. The court explains:

"While being arrested does not equate to an "accident or loss," Burton's arrest for the hit and run death of Timothy placed him on notice of both his potential criminal and civil liability for the accident which resulted in Timothy's death. Regardless of his claim he was not involved in this accident, he should have known he could be found legally responsible for Timothy's death. As a result, his insurance policy required him to provide prompt notice of the accident and loss. Burton's policy clearly stated: "We will pay damages for `bodily injury' or `property damage' for which any `insured' becomes legally responsible because of an auto accident." (Emphasis added.)"

Comment: failure to give prompt notice to an insurance company is an easy way to lose coverage. It can be a terrible mistake.

Edward X. Clinton, Jr.


www.clintonlaw.net


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