Title: Tri-Etch, Inc., d/b/a Sonitrol Security Systems of Muncie, et al v. Cincinnati Insurance Company

State: indiana

Issuer: Indiana Supreme Court

Document:

ATTORNEYS FOR APPELLANTS 
 
 
 
 
ATTORNEYS FOR APPELLEE 
James R. Fisher  
 
 
 
 
 
Richard R. Skiles 
Debra H. Miller  
 
 
 
 
 
Janet M. Prather 
Indianapolis, Indiana 
 
 
 
 
 
Indianapolis, Indiana 
 
Stacy M. Broman  
 
 
 
 
 
ATTORNEYS FOR AMICUS CURIAE   
Jacob S. Woodard 
 
 
 
 
 
PROPERTY CASUALTY INSURERS  
Minneapolis, Minnesota 
 
 
 
 
 
ASSOCIATION OF AMERICA 
 
 
 
 
 
 
 
 
Karl L. Mulvaney 
Lloyd H. Milliken 
 
 
 
 
 
Martha S. Hollingsworth 
Lucy R. Dollens  
 
 
 
 
 
Barry C. Cope 
Indianapolis, Indiana 
 
 
 
 
 
Indianapolis, Indiana 
 
 
 
 
 
 
 
 
 
ATTORNEYS FOR AMICUS CURIAE 
 
 
 
 
 
 
 
 
INSURANCE INSTITUTE OF INDIANA, INC. 
 
 
 
 
 
 
 
 
John C. Trimble 
 
 
 
 
 
 
 
 
Richard K. Shoultz 
 
 
 
 
 
 
 
 
Indianapolis, Indiana 
 
 
 
 
 
 
 
 
 
ATTORNEYS FOR AMICUS CURIAE 
 
 
 
 
 
 
 
 
COMPLEX INSURANCE CLAIMS 
 
 
 
 
 
 
 
 
LITIGATION ASSOCIATION 
 
 
 
 
 
 
 
 
Laura A. Foggan 
 
 
 
 
 
 
 
 
Benjamin J. Theisman 
 
 
 
 
 
 
 
 
Washington, DC 
 
 
 
 
 
 
 
 
 
Michael A. Dorelli 
 
 
 
 
 
 
 
 
Patrick J. Olmstead, Jr. 
 
 
 
 
 
 
 
 
Jason L. Fulk 
 
 
 
 
 
 
 
 
Indianapolis, Indiana 
 
 
 
 
 
 
 
 
 
______________________________________________________________________________ 
 
In the 
Indiana Supreme Court  
_________________________________ 
 
No. 49S02-0901-CV-8 
 
TRI-ETCH, INC., D/B/A SONITROL SECURITY 
SYSTEMS OF MUNCIE; JAN ETCHISON; NANCY 
ETCHISON; RUBY YOUNG, AS PERSONAL 
REPRESENTATIVE OF THE ESTATE OF MICHAEL 
YOUNG, DECEASED; AND SCOTTSDALE INSURANCE  
COMPANY,  
Appellants/Cross-Appellees 
(Plaintiffs below), 
 
v. 
 
FILED
CLERK
of the supreme court,
court of appeals and
tax court
Jul 21 2009, 12:06 pm
2 
 
CINCINNATI INSURANCE COMPANY, 
Appellee/Cross-Appellant 
(Defendant below). 
_________________________________ 
 
Appeal from the Marion Superior Court, No. 49D01-0505-CT-019704  
The Honorable Cale Bradford, Judge 
The Honorable David Shaheed, Judge 
_________________________________ 
 
On Petition to Transfer from the Indiana Court of Appeals, No. 49A02-0709-CV-827 
_________________________________ 
 
July 21, 2009 
 
Boehm, Justice. 
 
We hold that an alarm company‟s commercial general liability and umbrella insurance 
policies do not cover a claim against the alarm company for delays in observing or reacting to a 
failure of the retailer to make a scheduled setting of a night alarm.  The claim does not arise from 
an “occurrence” as defined by the policy, and is also within an exclusion for “alarm services.”   
We also hold that, standing alone, the fact that an insurer also denies coverage on other 
issues does not preclude the insurer from raising failure to give timely notice of a claim, and does 
not conclusively rebut the presumption that untimely notice of a claim prejudices the insurer.   
Facts and Procedural History 
 
 On August 12, 1997, Michael Young was employed as a clerk in a liquor store in 
Muncie, Indiana.  Shortly before the store‟s midnight closing time, Young was abducted by a 
robber, tied to a tree in a local park, and beaten.  At 3:00 a.m. the next morning, the store‟s 
security service generated a report showing that the store‟s night alarm had not been set at 
midnight as scheduled.  The store‟s general manager was called and arrived at the store at about 
3:30 a.m. to find that money and Young were missing.  Young was located at 6:00 a.m., still 
alive and tied to the tree, but he died of his injuries later that day.   
In August 1999, Young‟s Estate brought a wrongful death action against Tri-Etch, Inc., 
the operator of the store‟s security service under the brand name Sonitrol.  The complaint alleged 
3 
 
that Tri-Etch breached a duty to notify the store‟s manager within thirty minutes of closing if the 
night alarm had not been set, and that if Tri-Etch had acted promptly, Young would have been 
found earlier and would have survived.  After extensive procedural skirmishing, the case was 
dismissed based on a contractual one-year limitations provision in the agreement between Tri-
Etch and the store.  We ultimately reversed that judgment and remanded for trial.  Young v. Tri-
Etch, Inc., 790 N.E.2d 456, 459 (Ind. 2003).  After a mistrial, a $2.5 million jury verdict was 
entered against Tri-Etch, Inc. in December 2004.   
 
This case addresses the coverage of the Estate‟s claim under three insurance policies Tri-
Etch held at the time of Young‟s death.  Scottsdale Insurance Company had issued a commercial 
general liability (CGL) policy through the Sonitrol Dealers Association of which Tri-Etch was a 
member.  This policy included errors and omissions coverage for “Alarm Installation and 
Monitoring” with a $1 million limit of liability.  Tri-Etch had a second CGL policy from 
Cincinnati Insurance Company, also with a $1 million limit, but without an errors and omissions 
rider.  An umbrella or excess policy from Cincinnati had an added $2 million limit above 
“underlying policies.”   
One issue in this coverage dispute is whether Tri-Etch gave Cincinnati timely notice of 
the claim.  Tri-Etch notified Scottsdale promptly after the wrongful death suit was filed, and 
Scottsdale undertook Tri-Etch‟s defense in 1999.  The parties dispute when and how Tri-Etch 
notified Cincinnati.  The documentary evidence does not establish notice to Cincinnati until 
March 2004, but some of the designated deposition and interrogatory answers claimed earlier 
notice and denial of coverage.  In April 2004, Cincinnati filed a declaratory judgment action in 
federal court that ultimately was dismissed for lack of diversity jurisdiction.  After the verdict in 
the wrongful death case in December 2004, Scottsdale tendered its $1 million policy limits, and 
in January 2005 Tri-Etch settled with the Estate by assigning its claims against Cincinnati to the 
Estate.  In February 2005, Cincinnati attempted to intervene in the wrongful death case to file a 
motion to correct errors and appeal the judgment, but that effort was unsuccessful.  Cincinnati 
Ins. Co. v. Young, 852 N.E.2d 8, 17 (Ind. Ct. App. 2006), trans. denied.  
4 
 
 
In May 2005, the Estate, Tri-Etch,1 and Scottsdale filed this action against Cincinnati.  
The Estate sought the unpaid $1.5 million balance of the wrongful death judgment plus post-
judgment interest.  Scottsdale requested a declaratory judgment that under both of Cincinnati‟s 
policies, Cincinnati owed Tri-Etch a defense and coverage for the wrongful death judgment.  
Scottsdale sought contribution from Cincinnati for Scottsdale‟s costs of Tri-Etch‟s defense and 
the $1 million judgment it had paid.   
Cincinnati answered and counterclaimed, seeking a declaratory judgment that it owed no 
duty to defend or indemnify Tri-Etch against the wrongful death claim because (1) Young did 
not die as a result of an “occurrence” covered by its CGL or umbrella policy, (2) the umbrella 
policy excluded claims based on Tri-Etch‟s alarm services, and (3) Tri-Etch failed to provide 
timely notice as required by both policies.   
All parties moved for summary judgment.  The trial court first granted partial summary 
judgment in favor of the Estate and Scottsdale.  The trial court ruled that the Estate‟s claim 
against Tri-Etch was covered by Cincinnati‟s CGL and umbrella policies, but there were genuine 
issues of material fact as to whether Tri-Etch had provided timely notice and whether Cincinnati 
suffered any prejudice from delayed notice.  After that ruling, the Estate and Scottsdale moved 
for partial summary judgment to eliminate Cincinnati‟s defense based on failure to give notice of 
the claim.  Cincinnati responded with a cross-motion for summary judgment that it had no 
liability under either of its policies because of late notice.  The trial court granted summary 
judgment in favor of Cincinnati, concluding that Tri-Etch‟s notice to Cincinnati was 
unreasonably late, Cincinnati was prejudiced by the late notice, and Cincinnati therefore owed no 
coverage, indemnity, or defense obligation under either its CGL or umbrella policy.   
The Estate and Scottsdale appealed the grant of summary judgment to Cincinnati, and 
Cincinnati cross-appealed the partial summary judgment to the Estate and Scottsdale.  The Court 
                                                 
1 The policies principally involved in this case seem to insure only Tri-Etch, Inc.  The complaint alleges 
that Jan and Nancy Etchison, also plaintiffs in this case, are the sole owners of Tri-Etch, Inc., and also 
assigned whatever interest they have in the policies.  The excess policy issued to Tri-Etch, Inc. included a 
personal excess liability rider for excess coverage of claims under the Etchisons‟ homeowners and auto 
policies.  This personal rider had an exclusion for “business.”  No separate arguments are raised under 
personal policies.  Because the Etchisons present no additional issues in this appeal, for simplicity we 
refer to the Etchisons and Tri-Etch, Inc. collectively as Tri-Etch. 
5 
 
of Appeals reversed summary judgment in favor of Cincinnati and remanded with instructions to 
enter summary judgment in favor of the Estate and Scottsdale and order Cincinnati to indemnify 
Tri-Etch for the remaining $1.5 million.  Tri-Etch, Inc. v. Cincinnati Ins. Co., 891 N.E.2d 563, 
572–73, 577 (Ind. Ct. App. 2008).  The Court of Appeals held that the wrongful death claim 
arose from an “occurrence” under Cincinnati‟s policies.  The Court of Appeals reasoned that Tri-
Etch‟s failure to give prompt notice to the store manager was not intentional, and therefore was 
an “accident” which under the definition in the policy became an insured “occurrence.”  Id. at 
574.  The Court of Appeals also concluded that even if Tri-Etch provided untimely notice, 
Cincinnati was not prejudiced as a matter of law because it had also denied coverage for reasons 
other than late notice.  Id. at 572.  The Court of Appeals also ruled that Scottsdale was entitled to 
one half of its defense costs from the time Cincinnati was given notice of the claim.  Id. at 577.  
This issue was remanded for resolution of the dispute as to when Cincinnati was given notice of 
Tri-Etch‟s claim.  There was no explicit ruling on Scottsdale‟s claim for contribution to the 
amounts it paid to Tri-Etch or on Cincinnati‟s claim that an exclusion of coverage defeated Tri-
Etch‟s claim as to the umbrella policy.  We granted transfer.   
Standard of Review 
Each party challenges a summary judgment order, which this Court reviews de novo.  
Lean v. Reed, 876 N.E.2d 1104, 1007 (Ind. 2007).  Summary judgment is appropriate when there 
is no genuine issue of material fact and the moving party is entitled to judgment as a matter of 
law.  Ind. Trial Rule 56(C).   
I.  “Accident” or Commercial Error 
Cincinnati‟s CGL and umbrella policies both insure against liability for “bodily injury” 
caused by an “occurrence.”  The policies follow the widely used CGL form defining 
“occurrence” as “an accident, including continuous or repeated exposure to substantially the 
same general harmful conditions.”  The parties dispute whether Michael Young‟s death resulted 
from an “accident.”2  The Court of Appeals held that the Estate‟s claim for liability arising from 
                                                 
2 The Estate first responds that Cincinnati has waived its coverage defenses by failing either to defend or 
to file a proper declaratory judgment action.  Cincinnati is correct that an insurer may choose at its own 
6 
 
the loss was an “occurrence” because it was caused by Tri-Etch‟s unintentional oversight in 
failing to make the 12:30 a.m. call.  Tri-Etch v. Cincinnati Ins. Co., 891 N.E.2d 563, 574 (Ind. 
Ct. App. 2008). 
The complaint in the wrongful death action was for Tri-Etch‟s failure to call within a 
short time after it recorded the failure to set the alarm at midnight.  The Estate argues that Tri-
Etch‟s failure was an “accident,” noting that no one claims that Tri-Etch intentionally delayed its 
call with the expectation that Young would be killed.  Lack of intentional wrongdoing does not 
convert every business error into an “accident.”  This failure is the same sort of claim as lawyer 
malpractice, or an insurance agent‟s failure to secure coverage as the client directed.  1 Couch on 
Insurance § 1:35 (3d ed. 2005) (“Within professional liability insurance, several different 
coverages are available . . . [including] errors and omissions (E&O) coverage protecting against 
liability based on the failure of the insured, in his or her professional status, to comply with what 
can be considered in simplistic terms to be the standard of care for that profession. . . . E&O 
coverage appears in insurance policies protecting a wide variety of groups (not all of which fit 
the classical definition of „profession‟), including attorneys . . . [and] insurance agents . . . .”).  
Tri-Etch‟s failure was just such an “error or omission,” not an “accident,” and for that reason it is 
not an “occurrence” covered by Cincinnati‟s CGL and umbrella policies.  The CGL policy does 
not guarantee the quality of work or products of its insureds.  To the extent Tri-Etch had a duty 
to Young, it arose from its contract with Young‟s employer.  This may give rise to tort liability.  
See Restatement (Second) of Torts § 324A (1965).  But it does not convert a failure to meet a 
standard of care under a contractually assumed duty into an “accident.”  As explained below, that 
conclusion is consistent with precedent and the actions of the parties in this case. 
Indiana courts have frequently addressed whether a given event qualifies as an 
“occurrence” under identical or similar definitions in CGL policies.  Most recently, in Auto-
Owners Insurance Co. v. Harvey, 842 N.E.2d 1279 (Ind. 2006), the issue was coverage under a 
homeowner‟s liability policy for a drowning after the insured pushed a woman into the Wabash 
River.  The policy covered bodily injury caused by an “occurrence,” defined as an “accident.”  
We reaffirmed that “an accident means an unexpected happening without an intention or design,” 
                                                                                                                                                             
peril not to defend or seek a declaratory judgment, and failure to do either is not a waiver of defenses.  
Microvote Corp. v. GRE Ins. Group, 779 N.E.2d 94, 96 (Ind. Ct. App. 2002), trans. denied.   
7 
 
and found the policy applied because it was clear that the drowning was unintended even if the 
push was an intentional act.  Id. at 1283–85.  Although “accident” is broadly construed, in 
Harvey we noted the distinction between an “occurrence” as the term is used in CGL policies, 
and claims based on “commercial or professional conduct.”  Id. at 1284.  Claims based on 
negligent performance of commercial or professional services are ordinarily insured under 
“errors and omissions” or malpractice policies.  For this reason, CGL policies typically exclude 
claims arising out of professional or other business services.3  Erie Ins. Group v. Alliance Envtl., 
Inc., 921 F. Supp. 537, 541 (S.D. Ind. 1996) (applying Indiana law); see, e.g., Transamerica Ins. 
Servs. v. Kopko, 570 N.E.2d 1283, 1284–85 (Ind. 1991) (holding that a claim against a home 
builder for property damage because of settled soil did not arise from an “accident”); Erie Ins. 
Co. v. Am. Painting Co., 678 N.E.2d 844 (Ind. Ct. App. 1997) (no coverage for property damage 
alleged to have arisen from negligent hiring and retention of an employee); Terre Haute First 
Nat‟l Bank v. Pac. Employers Ins. Co., 634 N.E.2d 1336, 1338 (Ind. Ct. App. 1993) (a bank‟s 
negligent administration of a guardianship was a “professional relationship,” not an “accident”).    
The record includes no conclusive evidence on the timing of notice to Cincinnati, but it 
permits the inference that the parties‟ actions in this case reflect their assumption that the 
Scottsdale policy applied and the Cincinnati policy did not.  Scottsdale, which had included 
errors and omissions coverage in its policy, appears to have defended the underlying wrongful 
death case for almost five years without asserting any claim that Cincinnati should contribute.  
Similarly, under Cincinnati‟s view of the evidence, Tri-Etch asserted no claim to coverage by 
Cincinnati‟s underlying4 CGL policy or its umbrella policy until March 17, 2004, when its 
                                                 
3 Cincinnati‟s underlying CGL policy appears to contain an exclusion for product liability or negligence 
in providing services.  The CGL policy excludes “bodily injury” included within the “products-completed 
operations hazard.”  The “products-completed operations hazard” is defined to include all “bodily injury   
. . . arising out of . . . „your work.‟”  “Your work” includes “work or operations performed by you or on 
your behalf.”  Bodily injury arising out of Tri-Etch‟s alarm monitoring operation would appear to be 
excluded under this exclusion.  We can only speculate that this exclusion explains why Tri-Etch also had 
the Sonitrol Dealers policy from Scottsdale, which in form is apparently an overlapping CGL policy with 
a $1 million limit, but also includes errors and omission coverage.  Because these provisions were not 
addressed by the parties, we do not rely on them in resolving the appeal. 
4 The umbrella policy states that it is excess of the “underlying policies” defined to mean “the policies of 
insurance listed in the Schedule of Underlying Policies and the insurance available to the insured under all 
other insurance policies applicable to the „occurrence.‟”  The parties do not address, and we do not decide 
whether this definition, presumably intended to permit cumulative stacking of all underlying policies, has 
8 
 
attorney wrote to Cincinnati reporting that “there is some risk of a verdict in excess of one 
million dollars.”5  Plaintiffs had offered to settle the claim for $750,000 in March 2004.     
The Estate also argues that coverage is required under Cincinnati‟s CGL policy because 
the injury was to someone who was not a party to the contract and therefore could not be the 
basis of an errors and omissions claim.  It is often the case that an errors or omissions claim is 
asserted by an insured rather than by a third party.  But errors and omissions coverage is not 
limited to first-party claims.  As Judge Hamilton explained in addressing the scope of an 
exclusion for professional services involved in Erie Insurance Group, 
Nothing in the language of the professional services exclusion here or in the 
reasoning of those cases limits the exclusion to claims brought by the clients of 
the professional, i.e., to first party claims.  The exclusion here applies to damages 
or liability “due to any service of a professional nature” and does not require 
privity between the insured and the claimant. 
921 F. Supp. at 542. 
  
The Estate next argues that Cincinnati‟s policy applies because the liability action was 
tried on a tort theory, not on contract.  It is true that “occurrences” ordinarily do not include 
contractual obligations.  9 Couch on Insurance § 126:29 (3d ed. 2008).  But the obverse is not the 
case.  Not all tort claims are necessarily “occurrences.”  See id. § 126:30 (intentional torts are not 
“accidents”).  Moreover, as Couch explains, 
It is important to note . . . that there is a difference between risks that arise out of a 
business and business risks.  While the former may be covered under a 
commercial general liability insurance policy, the latter is not.  Business risk 
occurs as a consequence of the insured not performing well and is a component of 
                                                                                                                                                             
the effect of incorporating both Scottsdale‟s and Cincinnati‟s CGL policies if this were indeed an 
“occurrence.” 
5 Tri-Etch‟s attorney‟s March 17, 2004 letter states that Cincinnati had been given notice of the case 
“when the case was filed” and that Cincinnati had refused to defend.  The record includes no 
documentation evidencing any notice before 2004 and no documentation of any denial of coverage before 
that time.  The record includes other conflicting evidence regarding when Tri-Etch first notified 
Cincinnati of the events surrounding Michael Young‟s death.  Tri-Etch designated its answers to 
interrogatories stating that its owner discussed Young‟s death with Cincinnati‟s agent in the days 
following the event and that its employee forwarded the complaint and summons to Cincinnati‟s agent.  
The timing of “forwarding” is not explicitly stated, but it may be inferred to be shortly after Tri-Etch 
received the complaint.  Cincinnati designated the affidavit of the agent stating that he was never 
presented with a claim arising out of Young‟s death.  Cincinnati also designated the deposition testimony 
of its manager of the Young claim that notice was first received on, or shortly after, March 17, 2004.   
9 
 
every business relationship that is necessarily borne by the insured in order to 
satisfy its customers. 
9A Couch on Insurance § 129:1 (3d ed. 2005).  The same is true of contractually assumed duties 
that give rise to tort liability.  Both require rating by an insurer that takes into account the 
particular business of the insured. 
Finally, this is the third appeal of some aspect of this case.  The Estate argues that this 
Court necessarily decided in the first appeal that Tri-Etch did not make a business mistake.  This 
argument reads too much into our holding in Young v. Tri-Etch, 790 N.E.2d 456 (Ind. 2003).  In 
that case, we held only that the liquor store‟s contract with Tri-Etch, which limited the time in 
which the store could bring suit against Tri-Etch, did not apply to claims by the Estate because 
Young was not a party to the contract.  We did not address whether Tri-Etch‟s action was a 
business error or an accident. 
II.  Exclusions for Alarm Monitoring Services 
Apart from the fact that Tri-Etch‟s error does not qualify as an “occurrence,” there is no 
coverage under Cincinnati‟s umbrella policy for another reason.  The umbrella policy 
specifically excludes bodily injury “arising out of any act, error or omission of the insured in 
rendering or failing to render telephone answering, alarm monitoring or similar services.”  The 
parties contested whether Tri-Etch had any obligation to note a failure to arm the system, or 
undertook to report any failure within any particular time.  If there was any such obligation, we 
think a failure to note that the customer did not meet a scheduled arming of the system is at the 
core of “alarm services,” just as much as calling to report a break-in.  The jury resolved this issue 
against Tri-Etch.  The jury‟s verdict necessarily established that Tri-Etch‟s failure breached its 
contractual obligation to the store or fell below the standard of care of a reasonable alarm 
company.  The judgment therefore was for liability squarely within the exclusions of the 
umbrella policy.6   
                                                 
6 The Estate argues that the phrase “similar services” is ambiguous and should therefore be read in favor 
of coverage.  Because we conclude that Tri-Etch‟s error was part of its monitoring service, we do not 
address whether “similar services” is ambiguous. 
 
 
  
10 
 
The plaintiffs argue that the failure to make a prompt call was not part of “monitoring” 
because the alarm was shut off.  But failure to observe and report the lack of a scheduled arming 
of the system at midnight is the crux of the Estate‟s theory of liability.  In view of the jury‟s 
verdict, failing to make a 12:30 a.m. call was the result of Tri-Etch‟s failure to monitor or 
observe its own internal procedures.   
The Estate also argues that this exclusion renders the umbrella policy illusory if it is read 
to exclude coverage for all alarm services.  They reason that because Tri-Etch was in the security 
alarm business, the exclusion would have “effectively excluded coverage of all operations.”  We 
do not agree.  An alarm service, like any business, can incur liability from everyday activities 
that are not unique to the business.  It is therefore reasonable to obtain general liability coverage 
to insure against slip and fall accidents and the like.  As Judge Hamilton explained, 
A professional services exclusion in a general business liability policy cannot be 
read so broadly as to exclude liability for any act at all taken in the course of 
providing professional services.  Such a broad reading would exclude coverage, 
for example, for an automobile accident caused by . . . traveling from one 
professional meeting to another, or for negligent injury to a client visiting an . . . 
office.   
Erie Ins. Group, 921 F. Supp. at 542–43.  There may be gray areas or potential overlaps between 
professional services and general liability, for example if an installer of an alarm set fire to the 
customer‟s home.  But if failure to report a missed arming of the system gives rise to liability it is 
surely liability for “failing to render . . . alarm monitoring . . . services.” 
III.  Late Notice and Prejudice 
 
Cincinnati alleged that its policies did not cover the wrongful death claim because Tri-
Etch did not timely notify Cincinnati, and this late notice prejudiced Cincinnati.  As we recently 
observed in Dreaded, Inc. v. St. Paul Guardian Ins. Co., 904 N.E.2d 1267, 1271–72 (Ind. 2009), 
American jurisdictions fall into three groups on the need to establish prejudice from late notice.  
Some hold that prejudice is irrelevant to enforcement of a late notice defense.  Others require an 
insurer asserting this defense to demonstrate actual prejudice, and a third group creates a 
rebuttable presumption of prejudice in favor of the insurer.  As Dreaded noted, id. at 1272, 
Indiana is generally placed in the third category, with a citation to Miller v. Dilts, 463 N.E.2d 
257 (Ind. 1984). 
11 
 
Miller specifically addressed the consequences of failing to comply with a policy 
provision requiring notice of a claim to the insurer.  Miller held that a finding of prejudice is 
required to void coverage, but late notice was presumptively prejudicial to the insurer.  Miller 
went on to make clear that the insured could offer evidence of lack of prejudice, in which case 
the insurer could offer evidence establishing prejudice.  More recently, in Morris v. Economy 
Fire and Casualty Co., 848 N.E.2d 663, 666 (Ind. 2006), we dealt with provisions in a property 
damage policy that required the insured to produce documents and submit to examination under 
oath.  Id.  We unanimously held that these provisions were enforceable according to their terms 
without any showing of prejudice.  Our opinion included the following observation:   
While disputes regarding alleged breaches of an insured‟s duty under a separate 
“cooperation clause” may necessitate consideration of resulting prejudice to the 
insurance company, such prejudice is not a necessary consideration in 
determining the enforceability of other insurance policy provisions. 
Id.  In Dreaded, we noted that the quoted statement from Morris might be taken to qualify Miller, 
but we did not need to address that question to resolve the issue then before us.  We do not take 
Morris to alter the holding in Miller.  Both Morris and Miller specifically distinguished breach of 
the policy provision in question in their cases from breach of a general cooperation clause, which 
does require that the insurer show prejudice to defeat coverage.  The quoted language in Morris 
applies to some, but not necessarily all provisions in the policy “other” than the duty to 
cooperate.  Miller specifically addressed late notice, and held that prejudice to the insurer is 
presumed by the insured‟s late notice, but the insured may rebut the presumption with evidence 
showing that the late notice created no prejudice.  The parties have presented the case as one 
governed by Miller, and we reaffirm its holding today.  
 
The Court of Appeals followed Miller, but reasoned that Cincinnati was not prejudiced 
by late notice as a matter of law because it “consistently maintained that Tri-Etch is not entitled 
to coverage under either of its policies for the claim resulting from Young‟s death.”  Tri-Etch v. 
Cincinnati Ins. Co., 891 N.E.2d 563, 572 (Ind. Ct. App. 2008).  We do not agree that an insurer‟s 
denial of coverage on other grounds as a matter of law rebuts the presumption of prejudice from 
late notice existing under Miller.  There is no reason why an insurer should be required to forego 
a notice requirement simply because it has other valid defenses to coverage.  If there is no 
prejudice to the insurer from lack of notice, the absence of prejudice does not arise from the 
insurer‟s taking the position that it also has other valid defenses to coverage.  Rather, it arises 
12 
 
from the insurer‟s taking no action with respect to the claim because of its other defenses.  Even 
if an insurer consistently denies coverage, timely notice gives the insurer an opportunity to 
investigate while evidence is fresh, evaluate the claim, and participate in early settlement.  The 
fact that an insurer asserts other coverage defenses does not render these opportunities 
meaningless.  It is a fact issue whether the other defenses would have caused the insurer, if given 
timely notice, to do nothing with respect to the claim.  However, because we find that 
Cincinnati‟s policies did not apply to this claim, we do not consider whether Tri-Etch‟s notice 
was late or, if so, whether the late notice prejudiced Cincinnati. 
Conclusion 
 
The trial court‟s denial of summary judgment on Cincinnati‟s coverage defenses is 
reversed, and the case is remanded with instructions to enter judgment for Cincinnati. 
Shepard, C.J., and Dickson, Sullivan, and Rucker, JJ., concur.