Docket No. 99807. 

IN THE 

SUPREME COURT 

OF 

THE STATE OF ILLINOIS

COUNTRY MUTUAL INSURANCE COMPANY, Appellee, v. 

 LIVORSI MARINE, INC., et al., Appellants. 

Opinion filed May 18, 2006.

JUSTICE GARMAN delivered the judgment of the court, 

with opinion. 

Chief Justice Thomas and Justices Freeman, McMorrow, 

Fitzgerald, Kilbride, and Karmeier concurred in the judgment 

and opinion. 

OPINION
The circuit court of Cook County granted a declaratory 

judgment to Country Mutual Insurance Company, determining 

that it had no duty to defend or indemnify the defendant 

policyholders in this case. The appellate court affirmed this 

decision. 358 Ill. App. 3d 880. We granted defendants= petition 

for leave to appeal (177 Ill. 2d R. 315), and now affirm. 

Background 

Defendants Gaffrig Performance Industries, Inc., and 

Livorsi Marine, Inc., each carry commercial general liability 

insurance policies with Country Mutual Insurance Company. In 

December 1999, Livorsi brought a lawsuit against Gaffrig in the 

United States District Court for the Northern District of Illinois. 

The suit alleged various trademark violations related to the use 

of the AGaffrig Precision Instruments@ name. In response, 

Gaffrig filed a lawsuit with similar allegations against Livorsi. 

The suits, which sought both damages and injunctive relief, 

were consolidated. Gaffrig Performance Industries, Inc. v. 

Livorsi Marine, Inc., Nos. 99 C 7778, 99 C 7822 cons. (N.D. Ill. 

December 22, 2003). 

The language of both Gaffrig=s and Livorsi=s insurance 

policies gives Country Mutual the duty to defend and indemnify 

its insureds in any lawsuit seeking damages based on an 

advertising injury: 

AWe will pay those sums that the insured becomes 

legally obligated to pay as damages because of 

>personal injury= or >advertising injury= to which this 

coverage part applies. We will have the right and duty to 

defend any >suit= seeking those damages. We may at 

our discretion investigate any >occurrence= or offense 

and settle any claim or >suit= that may result.@

As a condition of coverage, the policies require Gaffrig and 

Livorsi to notify Country Mutual of any lawsuit: 

AIf a claim is made or >suit= is brought against any 

insured, you must: 

(1) Immediately record the specifics of the claim or 

>suit= and the date received; and 

(2) Notify us as soon as practicable. 
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You must see to it that we receive written notice of 

the claim or >suit= as soon as practicable.@

Although Gaffrig and Livorsi filed their lawsuits on 

December 1, 1999, neither party informed Country Mutual of 

the consolidated suit until August 2001. 

Country Mutual then filed a complaint for declaratory 

judgment in the circuit court of Cook County. The insurer 

sought a judgment that it had no obligation to defend or 

indemnify either Livorsi or Gaffrig in connection with the 

trademark lawsuit. Country Mutual argued that the claims 

raised in the lawsuit did not fit the policy=s definition of 

Aadvertising injury@ and that both Livorsi and Gaffrig breached 

the notice condition of their policies by failing to inform Country 

Mutual of the lawsuits for more than 20 months. 

Testimony during a brief trial centered on telephone 

conversations between Michael Livorsi, the owner of Livorsi 

Marine, Inc., and Gary Miller, the Country Mutual agent for both 

Gaffrig and Livorsi. These conversations concerned the 

possibility of a lawsuit between Gaffrig and Livorsi and 

occurred prior to the filing of the trademark suit. As the parties 

stipulated, Country Mutual did not receive actual notice of the 

lawsuit until August 2001, more than 20 months after Gaffrig 

and Livorsi filed suit. 

In pretrial and posttrial briefing, Gaffrig and Livorsi argued 

that Country Mutual was not prejudiced by the companies=

delay in notifying their insurer of the lawsuit. The companies 

argued that because Country Mutual insured both parties, it 

had a conflict that would have prevented the insurer from 

investigating the claim or defending either party in the lawsuit 

over the Gaffrig Precision Instruments trademark. Gaffrig and 

Livorsi therefore argued that the insurer would have had to pay 

for independent counsel for both parties regardless of when it 

received notice, and so the timing of the notice did not 

prejudice the insurer. Thus, the delay in notice should not 

relieve Country Mutual of its duty to defend. The companies 

found support for this argument in a line of cases beginning 

with Rice v. AAA Aerostar, Inc., 294 Ill. App. 3d 801 (1998). 

The opinion in Rice stated that, AWhen notice of the lawsuit is 

the issue, the rule is that the insurer is required to show that it 
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was prejudiced by the insured=s omission or delay in order to 

escape liability on its policy.@ Rice, 294 Ill. App. 3d at 807-08. 

Country Mutual argued that the proper inquiry was not 

whether the insurer was prejudiced, but whether the insureds 

had given Country Mutual reasonable notice of the lawsuit. 

Under other appellate cases, prejudice to the insurer is one of 

several factors in assessing the reasonableness of notice. See, 

e.g., Northbrook Property & Casualty Insurance Co. v. Applied 

Systems, Inc., 313 Ill. App. 3d 457, 466 (2000). Country Mutual 

argued that such a lengthy delay, without an excuse from 

Gaffrig and Livorsi, was unreasonable as a matter of law. Thus, 

this breach of the policies= notice conditions should relieve 

Country Mutual of its obligation to defend and indemnify the 

companies in their lawsuit. 

The circuit court found that the claims in the federal lawsuit 

potentially fell within the insurance policy language covering 

advertising injuries, triggering Country Mutual=s duty to defend. 

That conclusion is not at issue in this appeal. The court also 

determined that Gaffrig and Livorsi failed to give Country 

Mutual the notice to which it was entitled. It addressed Gaffrig 

and Livorsi=s prejudice argument in the following manner: 

AIn determining an insurer=s liability under the 

circumstances presented here, there is a case to be 

made for considering whether late notice actually 

prejudiced the insurer. However, any such possible 

argument tends to lose its force where there is no 

reasonable justification or excuse offered for not having 

given timely notice ***. In the present case, there has 

been literally no evidence of any justification or excuse 

offered by either of the defendants for a delay of more 

than 21 months in the giving of notice to Country 

Mutual. Under the circumstances, unless the court 

adopts the position that an unambiguous term of a 

contract may not be enforced unless the aggrieved 

party demonstrates some direct harm, there can be only 

one consequence flowing from the facts of this case.@

Accordingly, the circuit court entered judgment in favor of 

Country Mutual. Gaffrig and Livorsi appealed this decision. 

Prior to the appellate court=s consideration of the case, the 
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underlying trademark suit was resolved. The federal court 

granted Gaffrig=s request for an injunction against Livorsi=s use 

of the disputed trademarks. Gaffrig Performance Industries, 

Inc. v. Livorsi Marine, Inc., Nos. 99 C 7778, 99 C 7822 cons. 

(N.D. Ill. December 22, 2003). The court did not award 

monetary damages to either party. In the absence of damages, 

Country Mutual=s duty to indemnify is no longer an issue in this 

case. The appellate court therefore addressed only the 

insurer=s duty to defend. 358 Ill. App. 3d 880. 

The appellate court premised its decision on two 

concessions it concluded could be found in the parties= briefs. 

358 Ill. App. 3d at 883. It determined that Gaffrig and Livorsi 

conceded that the notice they gave Country Mutual was 

unreasonably and inexcusably late. 358 Ill. App. 3d at 883. The 

court also determined that Country Mutual conceded that, 

because of the conflict of interest, it could not prove it was 

prejudiced by the late notice. 358 Ill. App. 3d at 883. Thus, it 

framed the issue in the following terms: AGiven the 

circumstances presented to us, did Country Mutual have to 

prove prejudice?@ 358 Ill. App. 3d at 883. 

The court noted the distinction between notifying an insurer 

of an occurrence and notifying an insurer of a lawsuit. 358 Ill. 

App. 3d at 885. It determined that when notice of an 

occurrence is the issue, courts consider prejudice to the insurer 

as one of several factors in the evaluation of whether the 

insurer received reasonable notice. 358 Ill. App. 3d at 884. 

Additionally, some appellate decisions consider prejudice to the 

insurer only when the insured has a good excuse for the late 

notice of occurrence or where the delay in notice was relatively 

brief. 358 Ill. App. 3d at 885. However, when notice of suit is 

the issue, some appellate decisions state that prejudice is 

required for the insurer to deny coverage based on late notice. 

358 Ill. App. 3d at 885. 

The appellate court then addressed each decision 

embracing the latter proposition, beginning with Rice. 358 Ill. 

App. 3d 885-87. It noted that Rice was the first case to 

distinguish between notice of occurrence and notice of suit, 

and that this distinction did not have a basis in Illinois 

precedent. 358 Ill. App. 3d at 885. Further, prejudice did not 
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actually play a role in the Rice court=s decision. 358 Ill. App. 3d 

at 886. The court then examined cases citing Rice and 

concluded that these cases also did not rely on the Rice dictum

for their holdings. 358 Ill. App. 3d at 886-87. Citing a line of 

cases contrary to Rice, it concluded that there is no basis for 

distinguishing between notice of an occurrence and notice of a 

lawsuit. 358 Ill. App. 3d at 887-88. 

The court found that Country Mutual did not have to prove 

prejudice in order to deny coverage. 358 Ill. App. 3d at 888. It 

reached the following two conclusions: 

A(1) An insurer=s failure to prove prejudice is a factor 

to consider when determining whether the insured=s 

notice was unreasonably and inexcusably late, whether 

the notice has to do with an occurrence or a lawsuit; 

(2) Once it is determined the insured=s notice was 

unreasonably and inexcusably late, the failure of the 

insurer to prove it suffered prejudice is irrelevant, 

whether the notice has to do with an occurrence or a 

lawsuit.@ 358 Ill. App. 3d at 888. 

Gaffrig and Livorsi petitioned this court for leave to appeal. 

We allowed their petition. 177 Ill. 2d R. 315. We granted leave 

to file briefs amici curiae in support of Gaffrig and Livorsi to the 

Illinois Manufacturers Association, United Policyholders, and 

several Illinois businesses. We also granted leave to the Illinois 

Insurance Association, Property Casualty Insurers Association 

of America, and National Association of Mutual Insurance 

Companies to file a brief amicus curiae in support of Country 

Mutual. 

Standard of review 

Gaffrig, Livorsi, and their amici urge this court to adopt the 

rule that an insurance company that receives delayed notice of 

a lawsuit must prove that it was prejudiced by the delay in 

order to be relieved of its duty to defend a policyholder. In 

essence, they ask us to establish a new rule of construction for 

certain insurance policy notice provisions. This argument 

presents a question of law that we review de novo. See 

Travelers Insurance Co. v. Eljer Manufacturing, Inc., 197 Ill. 2d 
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278, 292 (2001) (construction of insurance contract is reviewed 

de novo). 

Analysis 

When construing the language of an insurance policy, a 

court is to ascertain and give effect to the intentions of the 

parties as expressed by the words of the policy. Central Illinois 

Light Co. v. Home Insurance Co., 213 Ill. 2d 141, 153 (2004). 

An insurance policy must be construed as a whole, giving 

effect to every provision. Central Illinois Light Co., 213 Ill. 2d at 

153. If the words used in the policy are unambiguous, they are 

given their plain, ordinary, and popular meaning. Central Illinois 

Light Co., 213 Ill. 2d at 153. Although insurance policies are 

construed liberally in favor of coverage, this rule of construction 

comes into play only when the policy language is ambiguous. 

Hobbs v. Hartford Insurance Co. of the Midwest, 214 Ill. 2d 11, 

17 (2005). 

This court has previously addressed the proper construction 

of insurance policy notice provisions. These clauses impose 

valid prerequisites to insurance coverage. Barrington 

Consolidated High School v. American Insurance Co., 58 Ill. 2d 

278, 281 (1974); see also International Harvester Co. v. 

Continental Casualty Co., 33 Ill. App. 2d 467, 471 (1962), citing 

Imperial Fire Insurance Co. of London v. Coos County, 151 

U.S. 452, 38 L. Ed. 231, 14 S. Ct. 379 (1894). A policy 

condition requiring notice A[a]s soon as practicable@ is 

interpreted to mean Awithin a reasonable time.@ Barrington 

Consolidated High School, 58 Ill. 2d at 282. Whether notice 

has been given within a reasonable time depends on the facts 

and circumstances of each case. Barrington Consolidated High 

School, 58 Ill. 2d at 282. Breaching a policy=s notice clause by 

failing to give reasonable notice will defeat the right of the 

insured party to recover under the policy. Simmon v. Iowa 

Mutual Casualty Co., 3 Ill. 2d 318, 322-23 (1954). 

In Simmon, this court discussed the role of prejudice in the 

reasonableness analysis. The plaintiff in Simmon had been 

injured in an automobile accident by a policyholder of the 

insurance company. Simmon, 3 Ill. 2d at 319. She promptly 
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notified the policyholder=s insurance company of the incident 

and of the lawsuit she filed. Simmon, 3 Ill. 2d at 319-20. 

Although notice was not given by the insured, the court held 

that it does not matter who notifies the insurer, as long as 

reasonable notice is given. Simmon, 3 Ill. 2d at 322-23. The 

court noted that, when examining the facts and circumstances 

of each case to determine if notice was reasonable, Alack of 

prejudice may be a factor in determining the question of 

whether a reasonable notice was given in a particular case yet 

it is not a condition which will dispense with the requirement.@

Simmon, 3 Ill. 2d at 322. 

When presented with an alleged breach of an insurance 

policy notice clause, the vast majority of Illinois appellate 

decisions have utilized an analysis that is consistent with 

Simmon. That is, courts have examined the circumstances of 

the case, including the presence or absence of prejudice, and 

determined whether the insurer in question received 

reasonable notice. See, e.g., Northbrook, 313 Ill. App. 3d at 

466; University of Illinois v. Continental Casualty Insurance 

Co., 234 Ill. App. 3d 340, 365-66 (1992); Hartford Casualty 

Insurance Co. v. Snyders, 153 Ill. App. 3d 1040, 1042-43 

(1987); United States Fidelity & Guaranty Co. v. Maren 

Engineering Corp., 82 Ill. App. 3d 894, 898 (1980); McFarlane 

v. Merit Insurance Co., 58 Ill. App. 3d 616, 619 (1978). When 

analyzing whether notice was reasonable, some courts have 

stated that prejudice is not a factor unless the delay in notice is 

relatively brief or the insured has a good excuse (see, e.g., 

Twin City Fire Insurance Co. v. Old World Trading Co., 266 Ill. 

App. 3d 1, 8-9 (1993); Fletcher v. Palos Community 

Consolidated School District No. 118, 164 Ill. App. 3d 921, 928 

(1987)), although this additional qualification is not found in 

Simmon. But even that permutation of the Simmon rule 

appropriately locates prejudice as one potential factor in the 

reasonableness analysis (see Simmon, 3 Ill. 2d at 322), rather 

than as a separate consideration to be reached only if there 

has not been reasonable notice. Other factors in the 

reasonableness analysis may include the specific language of 

the policy=s notice provision, the insured=s sophistication in 

commerce and insurance matters, the insured=s awareness of 
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an event which may trigger insurance coverage, and the 

insured=s diligence in ascertaining whether policy coverage is 

available. See Northbrook, 313 Ill. App. 3d at 466. 

Illinois courts have generally applied the Simmon analysis 

regardless of the type of notice that is at issue.1

 Insurance 

policies are likely to contain two different notice conditions: one 

that requires notice of the occurrence of an incident which may 

fall within the policy=s coverage, and one that requires notice of 

any lawsuit stemming from such an incident. When interpreting 

notice provisions, most Illinois decisions have not differentiated 

between the two requirements. See, e.g., American Family 

Mutual Insurance Co. v. Blackburn, 208 Ill. App. 3d 281, 284, 

291 (1991) (applying same standard to evaluate delayed notice 

of occurrence and notice of suit); Employers Reinsurance 

Corp. v. E. Miller Insurance Agency, Inc., 332 Ill. App. 3d 326, 

336-37 (2002) (examining several factors to determine whether 

notice of suit was given within a reasonable time); American 

Home Assurance Co. v. City of Granite City, 59 Ill. App. 3d 

656, 658 (1978) (requiring notice of occurrence within 

reasonable time based on facts and circumstances of case). In 

sum, the Simmon rule has been widely accepted as the proper 

analysis for review of all notice requirements contained in 

insurance policies. 

Certain recent appellate cases, however, refer to a different 

rule. This line of cases begins with Rice v. AAA Aerostar, Inc., 

294 Ill. App. 3d 801 (1998). In Rice, the plaintiff notified the 

defendant=s insurer that she had been injured on defendant=s 

 

 1We note, however, that notice requirements play a different role in 

claims-made policies than in occurrence-based policies such as those at 

issue today. See Central Illinois Light Co. v. Home Insurance Co., 213 Ill. 

2d 141, 173 (2004) (occurrence-based policies indemnify against claims 

occurring in a certain time period, regardless of when claims are made, 

while claims-made policies indemnify against claims made during a certain 

period, regardless of when underlying incidents occurred). Accordingly, 

each type of policy is analyzed differently by Illinois courts. See, e.g., 

Continental Casualty Co. v. Coregis Insurance Co., 316 Ill. App. 3d 1052, 

1062-63 (2000) (addressing claims-made policy). Today=s opinion does not 

address the role of notice requirements in claims-made policies. 
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property, but allegedly failed to notify the insurer of the lawsuit 

she subsequently filed. Rice, 294 Ill. App. 3d at 804. The court 

distinguished between notice of an occurrence and notice of a 

lawsuit, stating that when the latter is at issue, Athe rule is that 

the insurer is required to show that it was prejudiced by the 

insured=s omission or delay in order to escape liability on its 

policy.@ Rice, 294 Ill. App. 3d at 807-08, citing C. Marvel, 

Annotation, Modern Status of Rules Requiring Liability Insurer 

to Show Prejudice to Escape Liability Because of Insured=s 

Failure or Delay in Giving Notice of Accident or Claim, or in 

Forwarding Suit Papers, 32 A.L.R.4th 141, 145 (1984). 

However, the appellate court did not apply this rule. Instead, it 

determined that the insurer failed to show it did not receive 

actual notice of the lawsuit, and reversed the circuit court=s 

grant of summary judgment. Rice, 294 Ill. App. 3d at 808-09. 

The Rice court did not cite any Illinois precedent in support 

of its statement that an insurer must show that it was 

prejudiced by a delay in notice of suit. It relied only on a 

general annotation. See Rice, 294 Ill. App. 3d at 807-08, citing 

32 A.L.R.4th at 145. The annotation in question also does not 

cite any Illinois case law to support the rule embraced by Rice. 

See 32 A.L.R.4th at 157-71. In fact, the annotation cites 

several Illinois cases in support of the proposition that 

Aprejudice to a liability insurer is one factor in the determination 

of the question of the reasonableness of the insured=s omission 

or delay in giving the insurer notice of an accident, or in 

forwarding suit papers to it.@ 32 A.L.R.4th at 156, citing 

Kenworthy v. Bituminous Casualty Corp., 28 Ill. App. 3d 546 

(1975), Rivota v. Kaplan, 49 Ill. App. 3d 910 (1977), American 

Home Assurance Co. v. City of Granite City, 59 Ill. App. 3d 656 

(1978), and Illinois Valley Minerals Corp. v. Royal-Globe 

Insurance Co., 70 Ill. App. 3d 296 (1979). This proposition may 

be recognized as the Simmon rule. Simmon, 3 Ill. 2d at 322 

(Alack of prejudice may be a factor in determining the question 

of whether a reasonable notice was given in a particular case@). 

Thus, the Rice court=s ruleBthat an insurer attempting to 

escape liability must show it was prejudiced by a policyholder=s 

delay in giving notice of a lawsuitBwas completely unsupported 

by Illinois precedent and actively contradicted Simmon. 
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Nevertheless, subsequent appellate decisions have cited 

Rice for its new rule, even if they have not applied it. See Vega 

v. Gore, 313 Ill. App. 3d 632, 634 (2000); AAA Disposal 

Systems, Inc. v. Aetna Casualty & Surety Co., 355 Ill. App. 3d 

275, 284 (2005); Montgomery Ward & Co. v. Home Insurance 

Co., 324 Ill. App. 3d 441, 449 (2001); Illinois Founders 

Insurance Co. v. Barnett, 304 Ill. App. 3d 602, 611-12 (1999); 

Cincinnati Insurance Co. v. Baur=s Opera House, Inc., 296 Ill. 

App. 3d 1011, 1018 (1998); Zurich Insurance Co. v. Walsh 

Construction Co. of Illinois, Inc., 352 Ill. App. 3d 504, 511 

(2004). Although citing Rice, the Vega court apparently 

considered prejudice to the insurer as one indicator that the 

insurer did not receive reasonable notice of a lawsuit. Vega, 

313 Ill. App. 3d at 636. AAA Disposal and Montgomery Ward

dealt with notices of occurrences, and therefore cited the Rice

rule about notice of suit only to determine that it did not apply. 

AAA Disposal, 355 Ill. App. 3d at 284; Montgomery Ward, 324 

Ill. App. 3d at 449. The court in Illinois Founders mentioned 

Rice=s reference to insurer prejudice, but did not rely on 

prejudice for its decision, determining instead that the notice 

requirement at issue had not been breached. See Illinois 

Founders, 304 Ill. App. 3d at 611-12. The court in Zurich

reached a similar result. Zurich, 352 Ill. App. 3d at 511-12. In 

Cincinnati Insurance Co., the appellate court found that the 

insurer had received reasonable notice, but was nevertheless 

prejudiced, and remanded for reconsideration in light of Rice. 

Cincinnati Insurance Co., 296 Ill. App. 3d at 1020. Another 

case, Household International, Inc. v. Liberty Mutual Insurance 

Co., 321 Ill. App. 3d 859 (2001), cited Illinois Founders for the 

Rice rule, but did not require that rule for its result because it 

found that the excess insurer in question had no duty to 

defend. Household International, 321 Ill. App. 3d at 877. 

We will not permit the anomaly of Rice to supersede 

decades of case law that accords with this court=s statement in 

Simmon. The relevant language in Simmon states not only that 

Alack of prejudice may be a factor in determining the question 

of whether a reasonable notice was given in a particular case,@

but that lack of prejudice Ais not a condition which will dispense 

with the requirement@ of reasonable notice. Simmon, 3 Ill. 2d at 
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321. Simmon therefore clearly held that even if there is no 

prejudice to the insurer, a policyholder still must give 

reasonable notice according to the terms of the insurance 

policy. This court in Simmon did not distinguish between notice 

of an occurrence and notice of a lawsuit, and we decline to do 

so today. 

Accordingly, we hold that the presence or absence of 

prejudice to the insurer is one factor to consider when 

determining whether a policyholder has fulfilled any policy 

condition requiring reasonable notice. We also hold that once it 

is determined that the insurer did not receive reasonable notice 

of an occurrence or a lawsuit, the policyholder may not recover 

under the policy, regardless of whether the lack of reasonable 

notice prejudiced the insurer. To the extent that Rice and its 

progeny contradict our holdings, these cases are overruled. 

However, defendants and their amici do not rely on Rice

alone to argue that this court should adopt a new rule. For 

several reasons, they propose varying forms of a requirement 

that an insurer must show it was prejudiced by untimely notice 

if it wishes to deny coverage based on the breach of a notice 

condition. Gaffrig and Livorsi argue that this court should adopt 

this prejudice requirement when construing policy conditions 

that require timely notice of suit, while their amici argue that we 

should adopt a prejudice requirement for breaches of all policy 

conditions requiring notice. We do not find the arguments for 

either approach to be persuasive. 

First, defendants and their amici argue that adopting a 

prejudice requirement would align Illinois with a majority of 

states. Many other states do utilize this requirement, an 

approach which is frequently known as the Anotice-prejudice@

rule. See Friedland v. Travelers Indemnity Co., 105 P.3d 639, 

643 (Colo. 2005). While these states do require a showing of 

prejudice for an insurer to escape a policy obligation because 

of delayed notice, we note that their case law does not 

distinguish between notice of an occurrence and notice of a 

lawsuit. See, e.g., Atchison, Topeka & Santa Fe Ry. Co. v. 

Stonewall Insurance Co., 275 Kan. 698, 761-62, 71 P.3d 1097, 

1139 (2003) (Athis court has not indicated that it would make a 

distinction between notice of an occurrence and a suit@); Miller 
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v. Marcantel, 221 So. 2d 557, 560 (La. App. 1969) (AWe are 

unable to discern any logical or functional reason why a 

different rule should apply in Louisiana to the delayed notice of 

suit, than we now apply to the delayed notice of accident@); 

Cooperative Fire Insurance Ass=n of Vermont v. White Caps, 

Inc., 166 Vt. 355, 361-62, 694 A.2d 34, 38-39 (1997) 

(addressing the purpose of policy provisions requiring notice of 

accident, claim, or suit); see generally 32 A.L.R.4th 141, 145 

(1984). 

Instead, states that use the Anotice-prejudice rule@ require a 

showing of prejudice when an insurer seeks to escape policy 

obligations based on any type of delayed notice. In contrast, 

the Rice rule endorsed by Gaffrig and Livorsi requires a 

showing of prejudice only when the delay at issue is a delay in 

notice of suit. Because the Rice rule treats notice of suit 

differently than notice of occurrence, the Rice rule is 

inconsistent with other states which treat all forms of notice in 

the same way. Thus, adopting the Rice rule would create a 

new inconsistency between Illinois and its sister states: we 

would become unique by treating different types of notice 

differently. We see no reason to abandon our own precedent 

for a new and unique inconsistency, and therefore Gaffrig and 

Livorsi=s argument in favor of consistency fails. 

Defendants= amici make a stronger argument for 

consistency by asking us to adopt the notice-prejudice rule for 

both notice of occurrence and notice of suit, as other states 

have done. However, we are not inclined to adopt a rule that 

the parties themselves have not requested. 

Second, defendants and their amici argue that public policy 

considerations favor a prejudice requirement. They argue that 

the terms of insurance contracts are not freely negotiated, that 

public policy favors risk-spreading and compensation of injured 

parties, and that an insurer should not receive a windfall based 

on a policyholder=s technical violation. Country Mutual and its 

amici counter with the argument that it is unfair to impose the 

burden of proving prejudice on the insurer when it is 

comparatively easy for a policyholder to give notice. They also 

argue that requiring insurers to prove prejudice would increase 

costs for insurers and the public. We need not address these 
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policy arguments at great length. Balancing dueling policy 

concerns is a more appropriate role for the legislature than for 

this court. Cf. Members Mutual Insurance Co. v. Cutaia, 476 

S.W.2d 278, 281 (Tex. 1972) (Aon balance, it is better policy for 

the contracts of insurance to be changed by the public body 

charged with their supervision, the State Board of Insurance, or 

by the Legislature, rather than for this Court to insert a 

provision that violations of conditions precedent will be excused 

if no harm results from their violation@); PAJ, Inc. v. Hanover 

Insurance Co., 170 S.W.3d 258, 262 (Tex. Civ. App. 2005) 

(explaining regulation that responded to Cutaia). 

However, we do note that the defendant companies= policy 

arguments have as a common theme the disparate balance of 

power between insurer and policyholder. This theme is not 

especially persuasive when the policyholders in the present 

case are two sophisticated commercial parties who were 

represented by counsel from the inception of the events in 

question, particularly when one policyholder contacted the 

insurer prior to filing suit and was advised to take steps to 

determine if coverage would be available. 

One policy argument bears special attention. Gaffrig, 

Livorsi, and their amici argue that the notice-prejudice 

requirement would be consistent with the rule this court 

adopted in M.F.A. Mutual Insurance Co. v. Cheek, 66 Ill. 2d 

492 (1977). In Cheek, we addressed cooperation clauses, 

insurance policy conditions which require the policyholder to 

cooperate with the insurer. Cheek, 66 Ill. 2d at 498. We held 

that unless a breach of the cooperation clause substantially 

prejudices the insurer, the insurer cannot rely on the breach to 

escape its obligations under the policy. Cheek, 66 Ill. 2d at 498. 

Thus, Gaffrig, Livorsi, and their amici ask us to adopt a similar 

prejudice requirement for breaches of a policy=s notice clauses. 

For two reasons, we do not find Cheek persuasive in this 

case. First, the appellate court in Cheek examined the 

differences between the requirements of notice and 

cooperation. M.F.A. Mutual Insurance Co. v. Cheek, 34 Ill. App. 

3d 209, 218 (1975). Relying on the concern this court 

expressed in Simmon for protecting injured third parties, it 

found that A[a]n accident victim may provide the notice that an 
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insured neglects to give his insurer, and may thereby prevent 

the insurer from escaping its duty to pay. An accident victim 

may not supply the cooperation that an insured fails to give his 

insurer, and is completely powerless to remedy the insured=s 

breach of the cooperation clause.@ Cheek, 34 Ill. App. 3d at 

218. See also Miller v. Dilts, 463 N.E.2d 257, 265 (Ind. 1984) 

(addressing differences between notice and cooperation 

clauses). Thus, conditions of notice and cooperation are not 

entirely similar, and Illinois courts have not treated them 

similarly in the past. Second, our opinion in Cheek relied in part 

on a collection of Illinois appellate decisions that all relied on 

some form of prejudice inquiry. Our decision today is similarly 

in accord with the predominant analysis used by the appellate 

court, and it is further tied to our own analysis in Simmon. 

Cheek does not provide convincing support to alter an 

approach widely used by Illinois courts for decades. 

Conclusion 

Having determined that the circuit court applied the 

appropriate rule in this case, we affirm its judgment. Gaffrig 

and Livorsi have argued only that this court should adopt the 

notice-prejudice rule. They have not argued that the circuit 

court misapplied our existing rule. Stated differently, they have 

not appealed the circuit court=s conclusion that Country Mutual 

did not receive the notice to which it was entitled. Thus, we 

express no opinion as to whether the notice in this case was 

reasonable. Further, we express no opinion as to whether 

Country Mutual was prejudiced by the delayed notice. Instead, 

we affirm the circuit court=s legal conclusion that, in the 

absence of reasonable notice, Country Mutual is relieved of its 

duty to defend the companies. 

The judgment of the appellate court, which affirmed the 

judgment of the circuit court, is affirmed. 

Judgment affirmed.