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Connecticut Supreme Court Overrules Aetna v. Murphy and Places the Burden of Proving Prejudice of Late Notice on the Insurer

Blogs, Insurance Coverage

On March 27, 2012, the Connecticut Supreme Court reversed its position on late notice claims and held that insurers now bear the burden of proving prejudice caused by late notice of an insured’s claim. This case is significant in that it overrules over thirty years of Connecticut law.

The Second Circuit Court of Appeals certified three questions to the Connecticut Supreme Court in Arrowood Indemnity Company v. King. The Supreme Court resolved the first two questions in favor of the insurer before addressing the third question, which asked whether “social interactions between the insured and the claimant making no reference to an accident claim justify a delay in giving notice of a potential claim to the insurer.” In addition to concluding that such social interaction does not justify delayed notice, the Supreme Court sua spontedetermined that “an insurer must prove prejudice to disclaim its obligation to provide coverage based upon untimely notice.” 

Although the Court recognized that issue of prejudice was beyond the certified question, it nonetheless revisited the burden under Connecticut Law. Under Aetna Casualty & Surety Co. v. Murphy, 206 Conn. 409, 538 A.2d 219 (1988), Connecticut law previously placed the burden on the insured to prove that the insurer was not prejudiced by receiving late notice of a claim. The Court in Murphy reasoned that because the insured was seeking to be excused from its contractual obligation to notify the insurer of a claim, the insured should bear the burden of proof. In reconsidering Murphy, the Court in Arrowood stated that while the reasoning in Murphy was sound, “the task of proving a negative is an inherently difficult one, and it may be further complicated by the opposing party’s interest in concealment.” 

The Court noted that a majority of other jurisdictions place the burden on the insurer, to balance the interests between insurer and insured, and opted to join the majority position on this issue. In doing so, the Court overruled Murphy, thus turning Connecticut law on its head.