Fireman’s Fund Insurance Company v. Care Management, Inc., 2010 Ark. 110 (March 4, 2010)
The Supreme Court of Arkansas re-affirmed its status as a “no-prejudice” state for late notice of claim when notice is a condition precedent to coverage.
The United States District Court for the Eastern District of Arkansas certified the question to the state's highest court because the Eighth Circuit recently noted “the state of Arkansas law on the subject leaves room for doubt.” The Supreme Court acknowledged the “modern trend” in most states is to require prejudice, but held fast to the no-prejudice rule where notice is a condition precedent to coverage. Notably, the policy at issue in the Fireman’s Fund case contained standard the notice obligations and “legal action against us” clause (which provides that no suit may be brought unless all of the policy terms have been complied with). Distinguishing such language from the 1912 case of Hope Spoke Co. v. Maryland Casualty Co., 102 Ark. 1, where notice was required but the policy did not provide that failure to comply with the notice requirement forfeited coverage, the Supreme Court held that insurers are not required to demonstrate prejudice where notice is a condition precedent to recovery.
By Sarah J. Delaney
For a copy of the case click here. Case used with the permission of Lexis.