Connecticut Supreme Court Overrules Its Own Caselaw Regarding Insurance Claims for Personal Injuries


256px-Dune_SplashThe Connecticut Supreme Court took an unusual step in a recent decision, overruling its own prior decision. The current case, Arrowood Indemnity Company v. Pendleton King, began with a dispute between the parent of an injured child and another parent. The case developed into a dispute between the defendant and the defendant’s insurance company over whether the insurer received adequate pre-litigation notice of a claim. The court, in holding that the burden rests with the insurance company to prove prejudice caused by late notice, has altered an important aspect of the insurance claims process, one that could possibly have far-reaching impact on Connecticut personal injury attorneys and their clients.

King’s teenage son was driving his parents’ all-terrain vehicle (ATV) in 2002, using a nine-foot rope to tow another boy on a skateboard. The boy being towed, Conor McEntee, let go of the rope and fell, suffering serious head trauma that caused him to be hospitalized with a temporary coma.

The King and McEntee families reportedly continued to socialize after the accident, and the McEntees did not tell the Kings they intended to bring a claim for Conor’s injuries. Over a year after the accident, the Kings received a letter from an attorney representing the McEntees. The attorney notified them of the McEntees’ intent to claim damages for the accident. The Kings, through their insurance broker, presented the claim to their insurance carrier. They had homeowner’s and umbrella liability policies through the insurer. The insurance company, later substituted by Arrowood Indemnity Company, filed a declaratory judgment action, claiming that it had been prejudiced by the McEntees’ late notice of their claim, and that therefore it was not obligated under its contract with the Kings to defend or indemnify the Kings.

The Connecticut Supreme Court had ruled in a 1988 case, Aetna Casualty & Surety Co. v. Murphy, that the burden of disproving prejudice in a case of late or delayed notice of a claim fell on the insured. The court reasoned that, since the insured was the party seeking to enforce the terms of a contract despite not abiding by his own contractual obligations, the insured should have to show how enforcing the contract against the insurer would not unfairly prejudice the insurer.

The court in Arrowood explicitly overruled Murphy, holding that the insurer must prove by a preponderance of evidence that a delay in notice has caused prejudice. The court noted that courts in many other jurisdictions have ruled that the insurer has the burden of proving prejudice. It also noted the difficulty of “proving a negative,” which is what the insured would have to do under Murphy. This could “prevent the court from meaningfully weighing the parties’ real interests.”

Unfair Insurance Practices

In Connecticut, Individuals and business entities that take out insurance coverages have an expectation which the Courts will enforce to have their policy claims administered fairly in accordance with the terms of the Policy and the reasonable expectations of the parties. As insurance contracts are adhesion contracts which are generally not subject to negotiation and drafted by the Insurance company issuing the coverage, any ambiguities are traditionally resolved in favor of the insured party. Individual consumers may rely on such policy coverages when they experience certain occurrences which trigger coverage such as an automobile accident where the party at fault, known as the tortfeasor, has no liability insurance coverage in effect. In such instances, it is common for the injured party not at fault for the accident to seek policy benefits from their own insurer in lieu of Damages which would otherwise be recoverable from the tortfeasor’s own insurer if they had insurance coverage in effect.