Facts
- David Alcazar, age 18, lived with his mother and was an insured under her GEICO family automobile policy providing uninsured motorist (UM) coverage.
- While working on a farm owned by Alcazar’s mother, Christopher Hayes agreed to drive Alcazar to his truck only if Alcazar rode on the trunk of Hayes’s car.
- During the drive, Alcazar was thrown from the trunk and struck his head on the roadway, allegedly suffering serious injuries including permanent brain damage.
- GEICO’s UM coverage required notice “as soon as possible” after an accident and stated that suit would not lie unless the insured fully complied with policy terms.
- Notice to GEICO was not given until approximately one year after the accident; Alcazar and his mother attributed the delay to not realizing UM coverage applied and not initially understanding the extent of injury.
Issues
- Whether an insured’s failure to provide notice “as soon as possible” under an uninsured motorist policy automatically forfeits coverage, regardless of prejudice to the insurer.
- Whether the insurer must show it was prejudiced by delayed notice, and if so, what burden-shifting framework applies.
Decision
- The Tennessee Supreme Court reversed summary judgment for GEICO and reversed the intermediate appellate decision.
- The court held that late notice does not automatically forfeit UM coverage; the insurer must show prejudice from the delay.
- The case was remanded for further proceedings under the prejudice-based standard.
Legal Principles
- A notice provision in UM coverage is not enforced as an automatic forfeiture clause when notice is late; denial of coverage requires prejudice to the insurer.
- Late notice creates a rebuttable presumption of prejudice, which the insured may rebut by showing the delay did not materially impair the insurer’s ability to investigate, evaluate, or defend.
- The prejudice requirement reflects public policy favoring compensation under UM statutes and limits denial of coverage based solely on technical noncompliance.
- Prior Tennessee precedent applying a no-prejudice rule to late notice in this context was disapproved to the extent inconsistent with the prejudice standard.
Conclusion
The court adopted a prejudice-based approach to delayed notice under uninsured motorist policies: coverage is not forfeited solely due to late notice, and an insurer may avoid liability only upon a showing of prejudice, subject to a rebuttable presumption framework.