Court Opinion

ID: 8048665
Source: CourtListenerOpinion
Date Created: 2022-09-09 04:08:19.282475+00
Date Added: 2024-06-11T16:37:36.945045
License: Public Domain

Grimes, J.,
dissenting: I would like to emphasize at the outset the master’s finding not only that the defendant “was not prejudiced by failure of notice of continued disability” but that “even if the insured had fully complied with the provisions relative to proof of continuing disability, there was nothing that defendant could have done either to avoid or minimize liability for payment of the death benefit.”
Not only was there a finding of no prejudice, but there was also a complete absence of any evidence from which prejudice could have been found. We are not dealing here with a waiver of premium case. There is not one speck of evidence that premiums were either waived or reduced or that the defendant’s actuarial calculations, reserves or other interests were in the slightest degree compromised by the insured’s failure to file the annual report that his disability, which was in fact permanent, was continuing.
I would also like to emphasize that this case does not involve a failure to file the initial proof of total disability. If it did, we would have a different case. Here the insured timely filed the initial proof of disability and this was acknowledged by the company.
The enforcement of the annual report provisions in fact amounts to a forfeiture under the facts of this case. Insurance contracts such as this are in effect contracts of adhesion. The insured has no opportunity to bargain freely as to the terms of the policy but is offered coverage on a “take it or leave it” basis. Cooper v. Government Employees Ins. Co., 51 N.J. 86, 237 A.2d 870 (1968). It is therefore unfair to enforce these provisions strictly and unrealistically and allow the insurer to forfeit the coverage even though it is in no way prejudiced by the breach. I would hold that, with regard to the annual reporting provisions of this contract, the insurer may not forfeit the coverage unless it meets the burden of showing that it suffered prejudice sufficient to warrant the forfeiture. Cooper v. Government Employees Ins. Co. supra; Pickering v. American Empl. Ins. Co., 109 R.I. 143, 282 A.2d 584 (1971).
*413In my opinion, it is wrong to emphasize delay as the controlling factor in this case. It is true that this court has adopted a three-factor test in determining whether the notice of accident requirements of an accident liability policy have been met. Under that test, in determining whether notice has been given within a reasonable time, consideration is given to the length of delay, the reasons for the delay, and the effect of the delay on the insurer. Sutton Mut. Ins. Co. v. Notre Dame Arena, Inc., 108 N.H. 437, 237 A.2d 676 (1968); Abington Mutual Fire Ins. Co. v. Drew, 109 N.H. 464, 254 A.2d 829 (1969); St. Paul Fire and Marine Ins. Co. v. Petzold, 418 F.2d 303 (1st Cir. 1969). But in liability policies, notice is required as soon as practicable which has been construed to mean within a reasonable time after the accident. The purpose is to give the insurer an opportunity to investigate and prepare a defense. Sutton Mut. Ins. Co. v. Notre Dame Arena Inc. supra. By the very terms of a liability policy as well as the purposes to be served by the notice, the time of giving such notice is of importance and hence the length of delay weighs heavily on the question of prejudice and in the determination of whether notice was given within a reasonable time.
In the case at bar, however, the annual report requirement is not phrased in terms of a reasonable time from an event. Its purpose is not to give the company notice of an event within a reasonable time after its occurrence so it can investigate and prepare a defense, but rather is a requirement of an annual report on the continuance of a disability, the existence and totality of which, the company not only had notice but had acknowledged by its endorsement. In the case of the annual report requirement, delay does not weigh so heavily on, or automatically reflect, prejudice to the company as it does in the report of accident requirements.
Therefore, in a case like this, I would not allow delay in and of itself to effect a forfeiture of coverage. The master’s finding is that, in spite of the delay, there was no prejudice. To hold that the company is relieved of liability in this situation is to uphold a needless and unjust forfeiture. Albert v. *414Mutual Beneficial Health & Acc. Ass’n, 350 Pa. 268, 38 A.2d 321 (1944).