As Soon As Practicable Notification
May 2, 2016
The insured brought an action against the insurer seeking a declaration that she was entitled to supplemental underinsured motorist (SUM) coverage under an auto insurance policy. This case is Slocum v. Progressive Northwestern Insurance Company, 2016 WL 1165334.
The insured (Slocum) was injured in a motor vehicle accident on July 29, 2012, when the vehicle in which she was a passenger was hit from behind by a vehicle operated by a nonparty tortfeasor. At the time of the accident, Slocum was a named insured on an auto policy issued by Progressive Northwestern. Slocum underwent cervical fusion surgery. The tortfeasor's policy limits were $50,000 so Slocum notified Progressive that she was seeking coverage under the SUM endorsement of the auto policy. This notice was sent in August 2014.
The insurer denied coverage on the ground that Slocum failed to provide timely notice of her SUM claim pursuant to the terms of the policy. Slocum then sued. The Supreme Court, Onondaga County, denied the insured's summary judgment motion and this appeal followed.
The Supreme Court Appellate Division, Fourth Department, New York, concluded that Slocum's delay in notifying the insurer was not reasonable. The court noted that the policy requires that notice be given as soon as practicable and this means that the insured must give notice with reasonable promptness after the insured knew or should reasonably have known that the tortfeasor was underinsured. In this instance, the court said that the insured became aware of the limits of the tortfeasor's policy in September 2012 and she learned the extent of her injuries at least by June 2013. Under the circumstances, the court concluded that it was unreasonable for the insured to wait until August 2014 to notify Progressive of her SUM claim.
However, the court then ruled that Slocum was still entitled to coverage based on state law. This law stated that an insurer may not deny coverage based on untimely notice unless the failure to provide timely notice has prejudiced the insurer, and prejudice is not established unless the failure to timely provide notice materially impairs the ability of the insurer to investigate or defend the claim. The court found that the insured met her burden of proof that she provided notice within two years of the time required under the policy and that the insurer was not prejudiced by the delay. The insured learned of the limits of the tortfeasor's insurance coverage on September 11, 2012 and that date was the earliest time required under the policy for the insured to provide notice. Slocum provided notice in August 2014, less than two years later. Thus, prejudice to the insurer was not presumed under the law.
The court went on to declare that the insurer failed to meet its burden by demonstrating that its ability to investigate or defend the claim was materially impaired.
Therefore, the court reversed the ruling of the lower court and declared that Progressive was obligated to provide SUM coverage to the insured.
Editor's Note: The Supreme Court, Appellate Division, rules that although the insured's delay in notifying the insurer of a claim for SUM benefits was unreasonable, the state insurance law allowed coverage since the insurer could not prove it was prejudiced by the notification delay.