Readers of our blog know that the attorneys at Merlin Law Group practice nationwide and report on issues and cases nationwide. I recently began working on a new case in Nebraska, so I thought I would share with you a recent case1 there regarding notice requirements.
The State of Nebraska filed suit in 2007 against Rent-A-Roofer for failure to properly install a roof. Rent-A-Roofer disputed the facts and submitted the matter to its insurer, Farm Bureau. Farm Bureau said that the claim was not covered under the policy and refused to defend Rent-A-Roofer, forcing it to hire its own attorney and proceed with the lawsuit.
In 2010, the National Research Corporation sued Rent-A-Roofer and others and claimed that it failed to properly install a roof. This time, Rent-A-Roofer did not notify Farm Bureau because they believed there was no coverage for the claim and instead hired its own attorney, attended mediation, and reached a settlement. It then notified Farm Bureau. Farm Bureau refused the claim stating that Rent-A-Roofer had breached the policy’s notice requirement and voluntary payment provision.
In Nebraska, an insurer must show prejudice resulted from a violation of a notice provision before declining coverage.2 No court had decided whether the same applied to a violation of a voluntary payment provision. Prejudice is determined by looking at when the insurer received notice, but just the passage of time is not enough to be prejudicial.3 Notice of a claim is required to give the insurance company time to investigate the claim. A voluntary payment provision is similar to a notice requirement and cooperation clause because it gives the insurer an opportunity to protect its interests. Because of this similarity, the court held that prejudice was required to avoid paying the claim based upon the voluntary payment provision.
Since Rent-A-Roofer failed to give Farm Bureau notice of the claim until after litigation had commenced and a settlement had been reached, Farm Bureau did not get the chance to investigate the claim; they could only write a check to repay Rent-A-Roofer for the costs expended. The court found this to be prejudicial to the insurance company and they were granted summary judgment.
Rent-A-Roofer argued that since Farm Bureau had previously declined coverage for a similar claim that the duty to notify was waived. Where an insurer has already denied liability for a claim, it is not necessary for an insured to notify the insurer again and their duty to notify can be waived.4 However, the court found that since this claim involved new parties, a new occurrence, different allegations, etc. that it had no relation to the prior claim so Rent-A-Roofer was required to give notice of each claim.
I thought this case was interesting because it emphasizes that to get out of paying a claim due to late notice or voluntary payments made, the insurance company must first show prejudice. What is considered ‘prejudice’ likely turns on the facts of individual cases. If you have a claim, submit it to the insurance company. If they deny it, call one of us to look into it for you.
I found this gem and thought I would share it. Have you heard of construction folk music? This one is about being a roofer. Enjoy.
1Rent-A-Roofer v. Farm Bureau, 291 Neb. 786 (September 11, 2015).
2Herman Bros. v. Great West Cas. Co., 255 Neb. 88, 582 N.W.2d 328 (1998).
4Dutton-Lainson Co. v. Continental Ins. Co., 271 Neb. 810, 828, 716 N.W.2d 87, 102 (2006).