In the case of Vanderhoff v. Harleysville Insurance,a coverage dispute that arose out of a phantom car motor vehicle accident, the court was asked to determine when a carrier could disclaim coverage based on a showing of late notice and resulting prejudice.  The trial court had invalidated the disclaimer on the grounds that Harleysville “did not show that the result would have been any different with…a timely investigation.”  The Appellate Division has now reversed.  It wrote:

The entire justification for the requirement of a timely report of an unidentified vehicle to an insurer is to allow the insurer to investigate the accident to discover evidence. It is nearly axiomatic that the insurer cannot know what evidence it might discover in such an investigation. In fact, if the insurer could establish with certainty what evidence it would have discovered, it would, by definition, not be prejudiced by the lack of timely notice. As established by the testimony cited above, significant amounts of evidence, both physical and testimonial, are lost with the passage of 8 months’ time.

Sometimes common sense prevails, indeed.  The question is whether the thrust of the holding will be applied by the courts in other contexts.

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