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A paramount tenet of insurance law, and present in virtually every insurance contract, is that after a loss, accident or occurrence, the insured must put his carrier on notice within a reasonable amount of time.  As was recently affirmed under Virginia law, failure to give timely notice can result in denial of coverage.  In State Farm Fire & Cas. Co. v. Wallace, 997 F.Supp.2d 439 (W.D.Va. 2014), the Court held that an insured’s delay of 378 days to notify its carrier was both “substantial” and “material” and thus held that State Farm had no duty to provide coverage.

In Wallace, on March 3, 2010, Craig Caldwell (“Caldwell”) and Jonathan Wallace (“Wallace”) were shooting paintballs at each other as a game.  Later, Caldwell was driving off the property when Wallace was emptying his paintball gun by discharging into an area of nearby trees.  An errant paintball, however, traveled through Caldwell’s open car window, striking him in the eye.  Caldwell was in severe pain and unable to drive the car.  His eye was red and swollen and he was in significant pain.  Despite this, Caldwell refused to allow an ambulance be called.  After approximately thirty minutes, Mr. Caldwell resumed normal activity for a short time.  He then advised Wallace that he was in pain and needed to take medication and lie down.  The following day, Wallace went to the hospital where it was determined that he suffered from a detached retina. 

Thereafter, Wallace was charged criminally with maliciously shooting into an occupied vehicle, a felony charge.  Ultimately, Wallace pled to a lesser offense which required him to pay criminal restitution to Caldwell for his out-of-pocket expenses in the amount of approximately $3,200.  Wallace’s father wrote a check to Caldwell for a portion of this restitution.  On October 19, 2010, several days after Wallace’s father paid a portion of the restitution, Wallace received a letter stating that the Court-ordered restitution relates solely to criminal charges against Wallace, and does not release Wallace from forthcoming civil claims.  Approximately one year later, Wallace was civilly sued in the amount of $500,000 for the injuries suffered by Caldwell.  Wallace immediately took the litigation documents to his State Farm insurance agent.  Thereafter, State Farm filed a declaratory judgment action asserting that Wallace’s notification was untimely.

In Virginia, timely notice of an accident or occurrence is a condition precedent to an insurance company’s liability coverage.  “In order for an untimely notification to constitute a breach of the policy, such that the insurer no longer bears the duty to defend the insured, the failure to notify must be substantial and material.”  Penn-America Ins. Co. v. Mapp, 461 F.Supp.2d 445, 452 (E.D.Va. 2006).  Three factors bear on materiality:  (1) the reasonableness of the delayed notice; (2) the amount of prejudice suffered by the insurer as a result of the delay; and (3) the length of time that elapsed before notice was given.  Of critical importance to note is that some states, like Virginia, do not require that the insurer be prejudiced by the delayed notification in order for the breach to lead to a denial of coverage.

Wallace argued that he was unaware of potential civil liability – and therefore a claim – until he was served with the civil complaint which came over a year after the actual accident occurred.  The Court disagreed, noting that while this is a fact-intensive process, Wallace knew on March 3-4, 2010 that he shot Caldwell; Wallace knew that Caldwell’s eye had been injured and that Caldwell had to be hospitalized as a result; Wallace knew of the detached retina; and Wallace knew as late as October 2010 that there were potential civil implications.  Accordingly, the Court held that the delay of over one year to report the incident to State Farm was substantial and, moreover, based on the facts known to Wallace, it was unreasonable.  Thus, the Court ruled that State Farm was absolved of its obligations to Wallace.

Although fact-intensive, Wallace highlights the importance of notification to the insurer.  An insured who delays does so at his own peril.  Accordingly, if an insured has a question as to whether they should notify their carrier of a possible claim, they should do so as quickly as practicable.  An insured’s subjective belief that coverage is not implicated does not exonerate a late notice to the insurer.  If doubt exists, then an attorney should be consulted at the insured’s very earliest opportunity.

Frank Cragle is a trial lawyer and a member of Hirschler Fleischer’s Insurance Recovery Team. He handles a variety of commercial business disputes, including insurance recovery and policyholder claims. Frank also devotes a substantial portion of his time to business tort litigation and intellectual property claims. For more information, contact Frank at 804.771.9515 or

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