Court reaffirms principle that uninsured motorist notice provision will be enforced only if insurer proves prejudice
Jason Smith was hurt in a car accident that allegedly involved an uninsured motorist. Under the Farmers Insurance auto policy purchased by Smith, he was contractually obligated to give Farmers notice of a potential Underinsured Motorist (UM) claim within 30 days of the collision. Smith gave Farmers documented notice of the incident, including a copy of the police report, within 30 days, however, he made only PIP (wage and medical) claims at that time. He apparently did not even believe that there was a "phantom" uninsured vehicle involved in the 5-car collision, as alleged by one of the other involved motorists.
When the "insured" at-fault motorists continued to claim the involvement of an unidentified [and therefore "uninsured"] motorist, however, Smith's attorneys made a formal UM claim against Farmers more than one year after the wreck. Farmers denied responsibility, arguing that it was not obligated to provide coverage because it did not receive actual notice of Smith's intent to pursue a UM claim within the 30 day notice period. The Court of Appeals rejected Farmers' argument. It pointed to long-established Michigan law that requires an insurer attempting to enforce this kind of short notice period also prove that it suffered "actual prejudice" by reason of the late notice. That will be a factual issue to be resolved by the jury and not properly a subject for summary disposition, as requested by the insurer.