Insured’s Knowledge Of Injury Required Notice To Carrier

In One Beacon Insurance Company v. Freundschuh d/b/d Bobcat of Buffalo (WDNY 08-CV-823, 2011), plaintiff insurance company sought a declaration that it did not owe coverage to the insured for an accident involving equipment sold by the insured. The accident occurred on December 5, 2007. Within a day or two of the accident a customer notified the insured about the accident. The salesman that sold the equipment visited the injured party in the hospital a few days after the incident, and told the insured about the visit. In addition, an investigator from the injured party’s attorney went to the insured store and left a list of questions regarding the operational safety aspects of the equipment involved in the injured person’s accident. Finally, a lawyer representing the injured party told the insured in spring or early summer of 2008 that the insured would be sued.

The insured did not notify One Beacon until after being served with the complaint in September 2008. One Beacon denied coverage based upon late notice. The insured argued that he did not believe he would be involved in a lawsuit because it was a corporate issue, and that the manufacturer would handle the matter. The court held that, given the totality of the circumstances noted above, the insured did not have a good-faith belief in non-liability. Therefore One Beacon’s disclaimer was valid.

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