## Facts

- Mercedes M. Ramos was injured in an automobile collision proximately caused by Lawrence J. Williams’s negligence.
- Williams was insured under an automobile liability policy issued by Northwestern Mutual Insurance Company.
- Williams did not report the accident to Northwestern and did not cooperate with Northwestern in connection with Ramos’s claim.
- Ramos sued Williams and Northwestern for damages arising from the collision.
- Northwestern admitted issuance of the policy but asserted no coverage because Williams failed to provide notice and failed to cooperate as required by the policy.
- The trial court severed coverage issues from liability and damages.
- A jury found Williams liable and awarded Ramos $52,037 in damages.
- In a separate nonjury coverage trial, the court found Williams’s noncooperation was a material breach that substantially prejudiced Northwestern’s ability to defend, and entered judgment for Northwestern.
- The district court affirmed and certified a question of great public importance regarding whether modern Florida automobile-insurance legislation affected the cooperation-clause defense.

## Issues

1. Whether an automobile liability insurer may deny coverage based on the insured’s breach of a cooperation clause when the breach materially and substantially prejudices the insurer’s defense.
2. Whether Florida’s Financial Responsibility Act and no-fault legislation abrogate or limit an insurer’s ability to rely on a cooperation clause to avoid liability to an injured third party.

## Decision

- The Florida Supreme Court affirmed the judgment in favor of Northwestern.
- The Court held an insurer may avoid liability under an automobile liability policy when the insured materially breaches the cooperation clause and the breach substantially prejudices the insurer’s investigation or defense.
- The Court held Florida’s financial-responsibility and no-fault statutes did not expressly or impliedly eliminate the contractual cooperation requirement or the insurer’s prejudice-based defense.
- The Court accepted the trial court’s finding of “total noncooperation,” including failure to give notice and inability to locate the insured despite the insurer’s efforts, as sufficient to establish substantial prejudice.

## Legal Principles

- A cooperation clause in an automobile liability policy is enforceable; a material and substantial breach can relieve the insurer of liability if the insurer proves substantial prejudice.
- The insurer bears the burden to show diligence and good-faith efforts to obtain the insured’s cooperation before relying on noncooperation as a coverage defense.
- Statutes designed to ensure compensation for motor-vehicle accident victims do not, without clear statutory language, extinguish contractual defenses grounded in the insured’s failure to perform policy duties.
- An injured third party’s ability to pursue the insurer does not expand coverage beyond the policy’s terms when a proven, prejudicial breach defeats coverage.

## Conclusion

The court upheld the continued enforceability of automobile-policy cooperation clauses in Florida, permitting an insurer to deny coverage when the insured’s material noncooperation substantially prejudices the insurer’s ability to investigate or defend, notwithstanding financial-responsibility and no-fault legislation.


Ramos v. Nw. Mut. Ins. Co., 336 So. 2d 71 (Fla. 1976)