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If an insured (1) provides notice of claim to their insurance company within a reasonable period of time in accordance with their contract and (2) proves the insurer was not prejudiced by such delay, then the insurance company is bound to the insurance policy.
On November 3, 1995, plaintiff Alcazar and defendant Christopher Hayes were working in chicken houses on a farm in Bradley County owned by Alcazar's mother. Alcazar asked Hayes for a ride to pick up Alcazar's truck. Hayes agreed under the condition that Alcazar ride on the trunk of the car, since he was extremely dirty. Alcazar acquiesced and during the drive Alcazar was flung from the trunk, striking his head on the paved roadway. Alcazar, who was eighteen years old and living with his mother, was hospitalized for a couple of days and then returned home. Alcazar alleges that he suffers injuries as a result of the accident, including permanent brain damage.At the time of the accident, Alcazar was covered under a "Family Automobile Insurance Policy" issued by GEICO to Alcazar's mother, Deborah Wheatley. Within this policy, there was a notice provision which required notice to GEICO in the event the policy would be drawn upon for an uninsured motorist. Although the exact date that GEICO received notice of the accident is somewhat uncertain, it is clear that notice was not provided until approximately one year after the accident. GEICO filed a motion for summary judgment, asserting that under the terms of the policy, they could not be sued since the notice provision was breached. The lower court granted the motion and the TN court of appeals affirmed.
May an insured who fails to comply with a notice provision of his or her insurance policy enforce the policy in the event the insurer has not been prejudiced by the delay?
“In sum, we overrule Creasy, Phoenix Cotton, and other cases in this State holding that prejudice to the insurer is irrelevant to whether forfeiture of an insurance contract results from the insured's breach of a notice provision. Instead, 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? This standard shall apply to (1) all cases tried or retried after the date of this opinion, and (2) all cases pending on appeal in which the prejudice issue was raised in the trial court.”