## Facts

- Aetna Casualty and Surety Company insured a commercial building and paid the building owner for damage allegedly caused by a former tenant, Dr. George A. Murphy III.
- Aetna, as subrogee, sued Murphy for property damage tied to how Murphy dismantled his dental office when he ended his lease around November 30, 1982.
- Murphy was served with Aetna’s complaint on November 21, 1983.
- Murphy carried comprehensive liability insurance with Federal Insurance Company (Chubb), whose policy required:
  - written notice of an “occurrence” “as soon as practicable,” and
  - immediate forwarding of any demand, notice, summons, or other process when a claim or suit was brought.
- Murphy did not notify Chubb of Aetna’s claim until January 10, 1986, more than two years after service of the complaint.
- Murphy conceded the delay was unreasonable and inexcusable, but argued coverage should remain because Chubb had not alleged or shown prejudice.

## Issues

1. Whether untimely notice of a claim or suit discharges an insurer’s coverage obligations only upon a showing of material prejudice.
2. If prejudice is required, whether the insured or the insurer bears the burden to prove (or disprove) material prejudice from late notice at the summary judgment stage.

## Decision

- The Supreme Court of Connecticut affirmed summary judgment for Chubb, though on different reasoning than the trial court.
- The court held that late notice does not automatically forfeit coverage; the insurer’s duty continues unless the delay materially prejudiced the insurer.
- The court also held that when the insured has breached notice obligations, the insured bears the burden to prove the insurer was not materially prejudiced.
- Because Murphy did not present evidence or even assert in his summary-judgment papers that Chubb was not materially prejudiced, he failed to raise a genuine issue of material fact, and Chubb was entitled to judgment as a matter of law.

## Legal Principles

- Notice provisions serve to permit timely investigation, reduce exposure to fraudulent claims, and allow an insurer to estimate rights and liabilities.
- Untimely notice does not discharge an insurer’s coverage duty absent material prejudice resulting from the delay.
- When an insured seeks to avoid the consequences of noncompliance with policy notice provisions, a presumption of prejudice may arise, and the insured must rebut it by proving lack of material prejudice.
- On summary judgment, the insured must come forward with facts sufficient to create a triable issue on whether the insurer suffered material prejudice from late notice.

## Conclusion

Coverage is not forfeited solely because notice was late; material prejudice is required. However, where the insured breaches notice obligations, the insured must prove the insurer was not materially prejudiced, and failure to raise that issue with supporting facts supports summary judgment for the insurer.


Aetna Casualty & Surety Co. v. Murphy, 206 Conn. 409, 538 A.2d 219 (Conn. 1988)