Showing of Prejudice not Required when Insured’s Notice to Insurer is Unreasonably and Inexcusably Late
In Auto-Owners Ins. v. Xtreme Auto, the Wilkersons and Ivan Totev (“Totev”) were involved in an automobile accident. The Wilkersons filed a personal injury action against Totev and Xtreme Auto (“Xtreme”), the owner of the vehicle Totev was driving. Xtreme had liability coverage with Auto-Owners. In defense of the litigation, Xtreme mistakenly notified its subsequent carrier, National Casualty Company (“National”), who mistakenly accepted the defense. Xtreme did not give Auto-Owners notice of the accident until 47 months after the occurrence and 24 months after the Wilkerson action was filed.
The policy issued by Auto-Owners to Xtreme stated that, “Upon the occurrence of an accident covered by this policy, the insured shall give immediate notice to Auto-Owners of any occurrence covered under the policy or of any claim or suit brought against the insured.” Auto-Owners sought a declaration that it had no duty to defend or indemnify Xtreme due to lack of timely notice of the accident. Xtreme believed that its mistaken notification to National excused the delay.
The court held that because there was no evidence to suggest that the mistake was reasonable, Xtreme’s failure to give Auto-Owners notice of the accident was unreasonably and inexcusably late. The court in Auto-Owners Ins. v. Xtreme Auto held that a showing of prejudice was therefore unnecessary and that Auto-Owners had no duty to defend or indemnify Xtreme with regard to the Wilkerson action.
Auto-Owners Ins. Co. v. Xtreme Auto Sales, Inc., 2011 WL 529004 (N.D.Ill.. 2011).
