Cooperation Requirement
January 4, 2016
The insured filed a lawsuit against the insurer seeking a declaration that the insurer was obligated to pay monetary compensation to his then-girlfriend, now-wife, for injuries she incurred when she fell at his workplace. This case is Chandler v. Concord Group Insurance Company, 2015 WL 6395320.
Chandler's girlfriend visited his place of business in May 2009 and tripped on the steps. The insurer was not notified of this incident until February 2010, and requested that Chandler sign a nonwaiver agreement so it could investigate. Chandler refused to sign the agreement and determined that Concord's desire to investigate the claim was in effect a wrongful denial of coverage. In March of 2010, Chandler filed a lawsuit, alleging that Concord had refused to pay the claim. The trial court ruled that Chandler had breached his duty to cooperate with the insurer and granted summary judgment to the insurer. This appeal followed.
The Supreme Court of Vermont noted that the facts showed that Chandler had actively prevented Concord from investigating the incident by not reporting the claim for several months, by not allowing investigators access to the premises, and by interfering with discovery and depositions. The court also noted that Chandler had violated his duty to not undertake obligations without the insurer's consent by settling the claim against him.
In this instance, there was no dispute that within three weeks of Concord's first contacting Chandler, before allowing Concord to interview him or investigate at the accident site, and before allowing sufficient time for Concord to get the necessary medical records and other information to support the claim, Chandler filed a lawsuit against Concord. He did so after insisting that Concord pay without investigation, declining to participate in an interview or allow an investigator to visit the site of the accident, and indicating that if Concord did not settle the case right away, he would settle himself. Moreover, Chandler did not dispute the fact that he entered into a stipulation on the merits of the personal injury claim and subjected himself to liability in connection with the claim in the amount of $1,311,500.
On the basis of these facts, the Supreme Court concluded that Chandler forfeited his coverage under the Concord policy by failing to comply with the cooperation requirement. Also, Chandler's admission of liability and stipulation to a judgment for damages amounts to noncooperation under the terms of the policy.
The ruling of the trial court was affirmed.
Editor's Note: The cooperation clause in an insurance policy protects the insurer by obligating the insured not to intentionally and deliberately take any action that would substantially affect adversely the insurer's defense, settlement, or other handling of the claim. In this instance, the insured violated his duty of cooperation and in fact, acted in a manner meant to impede any investigation of the claim. Thus, his breach of the cooperation requirement meant the insurer was relieved of its obligations to defend and indemnify.