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Insured’s Failure To Timely Notify His Auto Insurer Of An Automobile Accident Bars UM Claim Against Insurance Carrier

By on October 18, 2019 in Claims with 0 Comments

On January 4, 2014, plaintiff James Ryan DiMaria (“DiMaria”), a Patterson fire inspector, had an automobile accident with Michelle Rodriguez.  Plaintiff claimed that the accident caused him permanent neck and head injuries.  There was a dispute concerning whether Rodriguez was at fault for this accident.  The issue in DiMaria v. Travelers Insurance Group, 2019 N.J. Super. Unpub. LEXIS 2050 (App. Div. October 4, 2019) was whether plaintiff’s failure to notify Travelers, his personal insurance carrier, of the accident barred his UM claim because Travelers’ right of subrogation had been foreclosed due to the plaintiff’s failure to file suit against the alleged tortfeasor (“Rodriguez”) within the two year statute of limitations.

The fault of the accident was disputed in this case.  The police report indicated that there was a City video surveillance footage showing that DiMaria collided with the Rodriguez vehicle after he proceeded through a red light into an intersection while driving his city vehicle.  Although DiMaria’s siren and emergency lights were activated, the police report stated that the plaintiff’s inattention was an “apparent contributing circumstance” of the accident.  However, DiMaria contended that Rodriguez was at fault, for failing to yield to an emergency vehicle.

Following the accident, DiMaria sought workers’ compensation benefits.  Although DiMaria viewed the surveillance footage, it was not preserved, and it was a disposed of as a matter of course after thirty days.  In June 2014, Farmers Insurance, which plaintiff’s counsel believed may have insured the Rodriguez vehicle, denied coverage.  The plaintiff’s counsel was unable to discover any other insurance and Travelers failed to identify any other insurance after a subsequent investigation.

Plaintiff’s counsel learned that the City’s insurance did not provide UM (uninsured motorist) coverage.  However, DiMaria’s personal policy with Travelers provided $500,000 of UM coverage.  However, it was not until September 9, 2016 that the new counsel for the plaintiff notified Travelers of his UM claim.

Thereafter, Travelers denied the UM claim because its right of subrogation had been foreclosed due to the plaintiff’s failure to file suit against the alleged tortfeasor (Rodriguez) within the two year statute of limitations.  Pursuant to the Travelers’ policy, the insured had a duty to notify Travelers promptly of “how, when and where the accident or loss happened.”  Additionally, the policy provided that a person seeking UM coverage must also send them a copy of any legal papers if a suit is filed.  Further, the endorsement for the UM coverage required that the insured had to do what is necessary to secure the insurer’s subrogation rights.

The plaintiff filed a declaratory judgment action in response to Travelers’ denial of coverage.  DiMaria argued that Travelers suffered no prejudice from the delay because based upon an investigator’s report, the driver, Michelle Rodriguez was then an unemployed 18 year old student who lacked assets and had educational and credit card debt.  Travelers responded by stating that her debt was minimal and the report did not find that she lacked any assets but, rather, she did not own real property.  Also, Travelers argued that the owner of the vehicle did own real estate, although it may have been encumbered by a loan exceeding its value.  Further, Travelers contended that it would have been futile to fully access the assets of the potential tortfeasors because the statute of limitations had already run.  (An action for a bodily injury must be filed within two years of the date of the accident.)  Travelers contended that it suffered prejudice from the plaintiff’s delay because its subrogation action was barred and, further, plaintiff failed to preserve the surveillance video which impaired its ability to assess fault for the accident.

At the trial court level, the judge agreed with Travelers that the plaintiff’s delay in notifying Travelers of the accident resulted in “its irretrievable loss of subrogation rights against the alleged tortfeasor or others potentially responsible.”  The delay in notifying Travelers prejudiced Travelers due to its inability to investigate the cause of the accident and to determine whether the plaintiff was comparatively more at fault than Rodriguez, which would preclude recovery against her or against Travelers.

Upon appeal, the Appellate Division agreed with the plaintiff’s argument that he was not obliged to file suit.  Rather, the plaintiff’s material breach of his duties under the policy was his failure to notify Travelers of the accident in a timely way. 

The Appellate Division was also unpersuaded by the plaintiff’s argument that Travelers was obliged to show that it suffered appreciable prejudice as a result of his breach of duties under the policy. The Court confirmed that Travelers was not obliged to demonstrate prejudice. Further, if prejudice was relevant at all, it was the plaintiff’s burden to show that Travelers suffered no prejudice.  Under the case law, the burden is placed on the insured to show lack of prejudice from a failure to provide notice.            

Thus, the Appellate Division affirmed the trial court decision, dismissing the plaintiff’s claim for UM coverage.  The failure to provide Travelers any notice of the claim until after its subrogation rights were entirely lost was fatal to pursing a UM claim against Travelers.  Regardless of the capacity of either Rodriguez to satisfy any judgment, assuming they were found at fault, Travelers was nonetheless entitled to have its subrogation rights preserved.  The Appellate Division noted that “the irretrievable loss of those rights resulted in a forfeiture of coverage.”  Accordingly, it affirmed the trial court’s decision, entering a summary judgment dismissal of the lawsuit for Travelers.

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Betsy G. Ramos

About the Author

About the Author:

Ms. Ramos is an Executive Committee Member and Co-Chair of the Litigation Department at Capehart Scatchard, P.A. located in Mount Laurel, New Jersey. She is an experienced litigator with over 25 years experience handling diverse matters. Practice areas include tort defense, business litigation, estate litigation, tort claims and civil rights defense, construction litigation, insurance coverage, employment litigation, shareholder disputes, and general litigation.

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