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American Justice Insurance Reciprocal v. Hutchinson3/27/2000
ttable presumption of prejudice, "provides the best balance between the competing interests." Alcazar v. Hayes, 982 S.W.2d at 856. We held:
. . . 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. Alcazar v. Hayes, 982 S.W.2d at 856.
The appellant and amicus curiae argue that if this Court elects to extend the rule in Alcazar to liability insurance policies, we should apply the rebuttable presumption approach adopted in Alcazar rather than one of the two other models. We agree. In Alcazar we noted that " ince the issue is not before us, we need not decide whether this approach should apply to a standard liability policy." Alcazar v. Hayes, 982 S.W.2d at 856 n.14. Now the issue of which burden of proof regarding prejudice in cases involving liability policies is before us, and we believe, as we did in Alcazar, that the rebuttable presumption model best achieves the competing interests at stake. In fact, many of the cases we cited in Alcazar in support of the decision to adopt the rebuttable presumption of prejudice model involved a failure to give notice of the filing of a lawsuit under a liability insurance policy. See Tiedtke v. Fidelity & Cas. Co., 222 So.2d 206 (Fla. 1969); Miller v. Dilts, 463 N.E.2d 257 (Ind. 1984); Fillhart v. Western Res. Mut. Ins. Co., 684 N.E.2d 1301 (Ohio App. 1996); Gerrard Realty Corp. v. American States Ins. Co., 277 N.W.2d 863 (Wis. 1979). Accordingly, when an insured has failed to provide timely notice of a claim against it in accordance with a liability insurance policy, it is presumed that the insurer has been prejudiced by the breach. The insured may rebut this presumption by proffering competent evidence establishing that the insurer was not prejudiced by the insured's delay.
CONCLUSION
For the reasons stated above, our answer to the first certified question is that the Knox County Sheriff and the employees of the Knox County Sheriff's Department were volunteers of the Scott County Sheriff's Department within the meaning of the liability insurance policy issued to the Scott County Sheriff's Department when they rendered assistance in the 1994 Carpenter incident. Our answer to the second question is that a standard liability policy is not automatically forfeited when an insured fails to comply with a policy's notice provision. Rather, breach of a notice provision establishes a presumption that the insurer was prejudiced by the delay. The insured may rebut the presumption with competent evidence that the insurer was not prejudiced by the delay in notice.
The clerk will transmit this opinion in accordance with Rule 23, ยง 8 of the Rules of the Supreme Court. The costs in this Court will be taxed to the Appellant, American Justice Insurance Reciprocal.
FRANK F. DROWOTA, III, JUSTICE
Concur: Anderson, C.J. Birch, Holder, Barker, J.J.
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