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§49.8 Failure to Give Timely Notice of Uninsured Motorist Claim

The Case: Alcazar v. Hayes , 982 S.W.2d 845 (Tenn. 1998).

The Basic Facts: Plaintiff brought an action to recover uninsured motorist benefits, alleging he was injured in a motor vehicle accident approximately one year prior. Plaintiff added his insurance carrier, GEICO, as a party defendant in accordance with Tennessee's uninsured motorist statute, Tenn. Code Ann. § 56-7-1201. GEICO moved for summary judgment, asserting breach of contract by Plaintiff for failing to comply with the notice provision in the insurance policy, which stipulated that the insured provide notice of an accident "as soon as possible."

The Bottom Line:

  • "The sole issue for our determination is whether an insurance policy is automatically forfeited when the insured does not comply with the policy's notice provision, regardless of whether the insurer has been prejudiced by the delay." 982 S.W.2d at 847.
  • "In recent years a 'modern trend' has developed, and a vast majority of jurisdictions now consider whether the insurer has been prejudiced by the insured's untimely notice. See id.; 32 A.L.R. 4th 141, §§ 3[b]-5; [13A Couch on Insurance §§ 49:339 & 49:50]. Although these courts have enumerated various public policy justifications to support this shift, a review of these cases indicates that three rationales are particularly pervasive: 1) the adhesive nature of insurance contracts; 2) the public policy objective of compensating tort victims; and 3) the inequity of the insurer receiving a windfall due to a technicality." Id. at 850.
  • "We believe that the public policy of Tennessee is consistent with the overwhelming number of our sister states that have adopted the modern trend." Id. at 851.
  • "Though we are hesitant to carve out an exception to the axiom proscribing judicial alteration of the terms of an unambiguous contract, we have determined, due to compelling public policy justifications, that it is now appropriate to depart from a rigid application of the traditional approach. We join the vast majority of jurisdictions which take into consideration the degree to which the insurer has been prejudiced by the delay in notice." Id. at 853 (footnote omitted).
  • "After resolving to join the modern trend, we must now determine how to incorporate the consideration of prejudice into our analysis. In the process, we must balance the equities between the parties. States that consider prejudice essentially follow one of three different approaches: 1) once it is shown that the insured has breached the notice provision, the contract is, nevertheless, effective unless the insurer shows that it has been prejudiced by the delay; 2) once it is shown that the insured has breached the notice provision, a rebuttable presumption exists that the insurer has been prejudiced by the delay; and 3) prejudice to the insurer is considered as a factor in the initial inquiry of whether the insured provided timely notice. See 32 A.L.R. 4th 141, [13A Couch on Insurance §§ 49:338; 49:339; 49:50]; [1 Appleman on Insurance § 4.30]." Id.
  • "After carefully weighing the advantages and disadvantages of each of these approaches, we believe that the rebuttable presumption rule is the soundest approach in the context of an uninsured/underinsured motorist policyFN14 as it provides the best balance between the competing interests. We agree with the Supreme Court of Connecticut that the instant issue is akin to unjust enrichment law: in both instances, an undeserving party seeks forgiveness for his or her own breach.FN15 See Murphy, 438 A.2d at 224. Therefore, once it is determined that the insured has failed to provide timely notice in accordance with the insurance policy, it is presumed that the insurer has been prejudiced by the breach. The insured, however, may rebut this presumption by proffering competent evidence that the insurer was not prejudiced by the insured's delay.
    FN14 Since the issue is not before us, we need not decide whether this approach should apply to a standard liability policy.

    FN15 In Tennessee, the party seeking relief under a theory of quantum meruit bears the burden of proof. D.T. McCall & Sons v. Seagraves, [796 S.W.2d 457, 464 (Tenn. Ct. App. 1990)]; John J. Heirigs Const. Co. v. Exide, [709 S.W.2d 604, 607 (Tenn. Ct. App. 1986)] ('If plaintiff is to recover on the theories of quantum meruit and unjust enrichment it must carry the burden of proving the value of the work performed.') (citing Moyers v. Graham, 83 Tenn. 57 (1885); Sadler v. Middle Tenn. Elec. Membership Corp., [259 S.W.2d 544 (Tenn. Ct. App.1952)])."
    Id . at 856.
  • "We quote approvingly the following non-exclusive guidelines for determining whether the insurer has been prejudiced:
    the availability of witnesses to the accident; the ability to discover other information regarding the conditions of the locale where the accident occurred; any physical changes in the location of the accident during the period of the delay; the existence of official reports concerning the occurrence; the preparation and preservation of demonstrative and illustrative evidence, such as the vehicles involved in the occurrence, or photographs and diagrams of the scene; the ability of experts to reconstruct the scene and the occurrence; and so on."
    Id .
  • "The appropriate inquiry is: 1) Did the insured provide timely notice in accordance with the contract? 2) If not, did the insured carry its burden of proving that the insurer was not prejudiced by the delay?" Id.

Other Sources of Note: Griffin v. Shelter Mut. Ins. Co., 18 S.W.3d 195 (Tenn. 2000) (declining to extend the public policy rationale substantiating Alcazar to a statutory interpretation of the service requirements mandated by Tenn. Code Ann. § 56-7-1206(a)); Bolin v. Tennessee Farmer's Mut. Ins. Co., 614 S.W.2d 566 (Tenn. 1981) (holding that a Plaintiff could maintain a direct action against his uninsured motorist carrier when the uninsured carrier had been actively involved in the litigation because the carrier had defended the plaintiff on a cross-claim and was therefore not prejudiced by the plaintiff's failure to comply with the statute.); Pope v. Leuty & Heath, PLLC, 87 S.W.3d 89 (Tenn. Ct. App. 2002) (holding that Alcazar pertained only to "occurrence" policies and not "claims-made" policies); Am. Justice Ins. Reciprocal v. Hutchison, 15 S.W.3d 811, 816-17 (Tenn. 2000) (holding that Alcazar rationale applies to cover general liability policies to the same degree that it applies to uninsured motorist claims based on the reasoning that the industry's policies were also contracts of adhesion).

After an accident, many injury victims and their families want more information on the accident and their legal rights. Consequently, many of them have found their way to these pages. While we are happy you are here, please understand Day on Torts: Leading Cases in Tennessee Tort Law was written to be a quick, invaluable reference for Tennessee tort lawyers. While the book provides the leading case for more than 300 tort law subjects and thousands of related case citations, it is not a substitute for personalized legal advice from a qualified lawyer.

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The foregoing is an excerpt from Day on Torts: Leading Cases in Tennessee Tort Law, published by John A. Day, Civil Trial Specialist, Fellow in the American College of Trial Lawyers, recipient of Best Lawyers in America recognition, Martindale-Hubbell AV® Preeminent™ rated attorney, and Top 100 Tennessee Mid-South Super Lawyers designee. Read John’s full bio here.

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