In Aetna Casualty & Surety Co. v. Murphy, 206 Conn. 409, 538 A.2d 219 (1988), the plaintiff insurer sought to recover for damages caused by the defendant to a building insured by the plaintiff. Id., 410. The defendant's insurance company, which had been impleaded as a third party defendant, successfully moved for summary judgment on the ground that the defendant had failed to notify it of the claim in a timely manner as required in the insurance contract. Id.
On appeal, the defendant claimed that he should have been allowed to recover from his insurance company despite the late notification because the insurance company had not been prejudiced by the delay. Id., 411. The court held that in the absence of material prejudice, an insurer's duty to provide coverage is not discharged by the failure of its insured to give timely notice of the claim. Id., 418.
The court further held that "the burden of establishing lack of prejudice must be borne by the insured . . . because it is the insured who is seeking to be excused from the consequences of a contract provision with which he has concededly failed to comply." Id., 419-20.
The Court examined what role prejudice should play in the judicial enforcement of standard notice clauses in insurance policies that operate to entirely discharge an insurance carrier from any further liability on its insurance contract if the insured unreasonably delays its notification of claim to the insurer, thereby causing a "'disproportionate forfeiture'"; Aetna Casualty & Surety Co. v. Murphy, supra, 206 Conn. at 413; to one of the contracting parties.
The Court stated that "in numerous cases, it has held that, especially in the absence of conduct that is 'wilful,' a contracting party may, despite his own departure from the specifications of his contract, enforce the obligations of the other party with whom he has dealt in good faith." Id.