The New Hampshire Supreme Court has ruled that an insurer had been prejudiced by the failure of its insureds to cooperate – and that the insurer did not have to notify the insureds in advance that it was going to rely on their failure to cooperate to deny their claims.
The Case
As the court explained, in 2006, Brian and Dorothy Krol and their three children were injured in a motor vehicle accident with an at-fault underinsured driver.
In 2009, shortly before settling their claims against the driver, the Krols, through their attorney, notified their insurer, Liberty Mutual Insurance Company, of their underinsured motorist claims. Liberty Mutual requested the medical records and bills necessary to adjust the claims.
Over the next six years, the Krols failed to provide the necessary documents, despite Liberty Mutual's numerous requests. The Krols also neglected to assist in the settlement of their claims.
Liberty Mutual closed the Krols' claims in 2015.
The Krols sued Liberty Mutual, seeking underinsured motorist benefits.
The trial court granted summary judgment in favor of Liberty Mutual based on the Krols' breach of the duty to cooperate in the investigation and settlement of their claims.
The Krols appealed to the New Hampshire Supreme Court. They argued, among other things, that the trial court had erred because Liberty Mutual had suffered no actual prejudice and because it had not given the Krols prior notice of its intent to rely on the policy's cooperation clause.
The New Hampshire Supreme Court's Decision
The court affirmed.
In its decision, the court pointed out that the trial court found that Liberty Mutual had suffered actual prejudice given that the Krols:
- Had a “six year history of obstructing its claims investigation”;
- Had failed to provide complete medical records and bills or authorizations allowing Liberty Mutual to obtain the documents on its own, which had prevented Liberty Mutual from fully evaluating and determining its coverage obligations; and
- Had failed “to participate in the adjustment process,” which had prevented Liberty Mutual from resolving the claims and had “caused it to expend significant time and resources in attempting to do so.”
The court then rejected the Krols' contention that these findings fell short of actual prejudice and ruled that the Krols had “failed to raise a genuine issue of material fact” as to whether Liberty Mutual had suffered actual prejudice.
The court next considered the Krols' argument that Liberty Mutual could not rely on the policy's cooperation clause because it had not given notice to the Krols that it would do so. The court concluded by observing that the Krols had provided “no authority for their position that an insurer may not deny coverage for noncooperation without prior notice,” adding that it could not find any such authority itself.
Steven A. Meyerowitz
Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. He may be contacted at [email protected].