Chapter 2 - § 2.13 • COMPLIANCE WITH POLICY NOTICE REQUIREMENTS

• Jurisdiction: Colorado

§ 2.13 • COMPLIANCE WITH POLICY NOTICE REQUIREMENTS

§ 2.13.1—Policy Provision Requiring Insured to Give Notice of Hit-And-Run Accident Is Enforceable as Condition Precedent to Coverage

Where insureds were allegedly injured in hit-and-run motor vehicle accident and failed to notify police of accident within 24 hours as required by policy, insureds were barred from recovery of UM benefits. Compliance with policy notice requirement was enforceable as a condition precedent to coverage. Notice requirement allows insurer to make timely and adequate investigation of claim and to protect itself against invalid or fraudulent claims. Moreover, insurer was not required to show prejudice to rely upon notice provision as a defense to claim. Shelter Mutual Insurance Co. v. Selley, 942 P.2d 1370 (Colo. App. 1997), disapproved in part by Clementi v. Nationwide Mutual Fire Insurance Co., 16 P.3d 233 (Colo. 2001). See § 2.13.2.b.

Shelter Mutual Insurance Co. v. Selley, 942 P.2d 1370 (Colo. App. 1997), disapproved in part by Clementi v. Nationwide Mutual Fire Insurance Co., 16 P.3d 233 (Colo. 2001), was a dispute over UM benefits claimed after an alleged hit-and-run accident. Gordon Selley and Beverly Rogacki alleged that they had been injured in a hit-and-run accident on August 31, 1993. Selley had UM coverage with Shelter Mutual Insurance Co., and Rogacki had UM coverage with Farmers Insurance Exchange. Both insurers denied coverage on the ground that Selley and Rogacki had failed to report the accident to the police within 24 hours, as required by the policies. The insurers filed declaratory judgment actions against Selley and Rogacki, and the trial court entered summary judgment in favor of the insurers. The court of appeals affirmed.

The court of appeals agreed with Shelter and Farmers that the policy provision requiring Selley and Rogacki to notify the police within 24 hours of a hit-and-run accident was a condition precedent to coverage, and that their failure to comply with this provision relieved the insurers of their obligation to provide UM coverage.

The court of appeals pointed out that "[p]olicy provisions requiring an insured to provide timely notification to the insurer of an accident as a condition precedent to coverage are generally enforceable." Id. at 1371. Here, the court found that the policy provisions requiring notice to the police within 24 hours of a hit-and-run accident were clear and unambiguous, as was the policy language requiring the insureds to comply strictly with the notice requirement. The court of appeals noted that "Colorado courts have strictly enforced analogous policy provisions which require an insured promptly to notify an insurer of a potential claim." Id. "[S]trict enforcement of such provisions allows the insurer to make a timely and adequate investigation of the accident or claim, and allows the insurer to protect itself against invalid or fraudulent claims." Id. Moreover, the court of appeals recognized that while Colorado courts had not previously addressed a policy provision similar to the one at issue here, courts in other jurisdictions have strictly enforced such notice requirements. Id. at 1372. The court agreed "with those courts which have enforced policy provisions requiring that notice be given to police within 24 hours of a hit-and-run accident." Id. Unless police are notified immediately after a hit-and-run accident, it may not be possible for an insurer to obtain independent information verifying the circumstances of the accident, since any opportunity to gather such information will likely evaporate. Id. at 1372-73. Since neither Selley nor Rogacki offered any excuse for failing to notify the police within 24 hours, the court of appeals held that the notice provisions "are enforceable as a condition precedent to coverage." Id. at 1373.

Finally, the court of appeals held that the trial court did not err in concluding that the insurers did not have to demonstrate prejudice in order to enforce the notice provision. Citing Marez v. Dairyland Insurance Co., 638 P.2d 286 (Colo. 1981), the court of appeals pointed out that "our supreme court has concluded that insurers are not required to demonstrate that they have been prejudiced by an insured's failure to comply with the notice provision." 942 P.2d at 1373. This case, like Marez, was not merely a case of late reporting, but of total failure to comply with the notice provision. "[T]o require a showing of prejudice before an insurer could enforce a notice provision such as those here would add to the policy a condition not agreed upon by the parties." Id. Therefore, the court agreed with the trial court's conclusion that the insurers were not required to show prejudice to enforce the notice requirement. Id.⁵

§ 2.13.2—Insured's Duty to Give Insurer Notice of Possible UIM Claim Arises When Insured, with Reasonable Diligence, Can Ascertain That Alleged Tortfeasor Is Underinsured

a—Alleged delay of 15 months did not bar...