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St. Paul Fire and Marine Insurance Co. v. Estate of John R. Hunt3/14/1991
ade" policies that numerous courts have held that excusing a delay in notice beyond the policy period should not be done, because to do so would alter a basic term of the insurance contract which expresses the parties' agreement. City of Harrisburg, supra (claims made coverage exists under Pennsylvania law only when claim is timely reported); Zuckerman, supra (extension of notice period in claims-made policy constitutes an unbargained-for expansion of coverage, gratis, resulting in substantially broader risk to insurer); Civic Associates, Inc. v. Security Insurance Co., 749 F. Supp. 1076 (D. Kan. 1990) (allowing notice beyond the policy period would alter a basic term of the contract). But see Sherlock v. Perry, 605 F. Supp. 1001 (E.D. Mich. 1985) (if notice is given within reasonable time, and insurer suffers no prejudice by the delay, coverage under claims-made policy exists under Michigan law).
Here, we conclude that the condition requiring the insured to provide notice of a claim during the policy period was a material part of the agreed exchange. Therefore, impracticability cannot serve as an excuse for the non-occurrence of such a material condition. See Sagamore Corp. v. Diamond West Energy Corp., supra. Thus, the trial court erred.
We are not unmindful of the traditional rule that failure to give timely notice to an insurer will not relieve the insurer from liability under the contract if the insured has a justifiable excuse. See Certified Indemnity Co. v. Thun, 165 Colo. 354, 439 P.2d 28 (1968); Graton v. United Security Insurance Co. 740 P.2d 533 (Colo. App. 1987); cf. Marez v. Dairyland Insurance Co., 638 P.2d 286 (Colo. 1981). We are also aware that other jurisdictions have specifically recognized mental incapacity as a justifiable excuse for untimely notice. Woodmen's Accident Ass'n v. Byers, 62 Neb. 673, 87 N.W. 546 (1901); see generally cases cited at 44 Am. Jur. 2d Insurance ยง 1337 (1982) (fn. 84). However, this rule has been applied only to traditional occurrence policies, and we believe that the unique role of notice in a "claims-made" policy warrants a different result here.
In light of our resolution of this issue, we need not address St. Paul's other contentions regarding prejudice from the delay and post-judgment interest.
The judgment is reversed, and the cause is remanded for entry of judgment declaring that St. Paul's policy did not provide coverage for the claim at issue.
JUDGMENT REVERSED AND CAUSE REMANDED WITH DIRECTIONS.
Hume and Reed, JJ., concur.
Disposition
JUDGMENT REVERSED AND CAUSE REMANDED WITH DIRECTIONS.
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