Providing Notice Of Claim To Insurance Company

Fort Worth insurance lawyers need to tell their clients to immediately report it to their insurance company when they are served with lawsuit papers. A 1995, Texas Supreme Court case styled, Harwell v. State Farm illustrates why.
Here is some of the relevant information from the Harwell opinion.
On December 5, 1986, Tammy D. Hubbard and Eric Christopher Leatherman were in an automobile accident. The collision killed Hubbard and seriously injured Leatherman. Hubbard was insured by State Farm under her mother’s policy.
On December 2, 1988, Leatherman and his father, E.L. Leatherman, filed suit against “Tammy D. Hubbard, Deceased.” The Leathermans’ lawsuit stated that Hubbard’s estate could be served with process by serving the temporary administrator of her estate, although it did not provide a temporary administrator’s name or address. On the same day, John Groce, the Leathermans’ attorney, filed an application for the appointment of a temporary administrator of Hubbard’s estate in probate court. The probate court appointed Valerie Harwell, a legal secretary in Groce’s law office, temporary administrator of Hubbard’s estate. The Leathermans served Harwell with citation of the suit on January 9, 1989. However, Harwell had not yet qualified as administrator because she had not posted the $13,000 bond required by the order of appointment or received her letters of temporary administration.
In July 1989, Groce sent a letter to State Farm informing it of the Leathermans’ suit against Hubbard’s estate. Groce enclosed a copy of the petition, the police report of the accident, and a notice of default and intent to dismiss for want of prosecution from the coordinator of the court in which the Leathermans filed suit. Groce advised State Farm to file an answer to avoid a default judgment against Hubbard’s estate. He did not inform State Farm that Harwell had been appointed temporary administrator or that she had been served with notice of the suit. The only mention of Harwell was a notation at the end of the letter which stated: “cc: Ms. Valerie Harwell, Temporary Administrator.”
Two months after Groce sent the letter, he called C. Victor Anderson, Jr., State Farm’s attorney. Groce advised Anderson that Harwell soon would be named the permanent administrator of Hubbard’s estate. Groce indicated that after Harwell was named permanent administrator, he would amend the Leathermans’ petition, re-serve Harwell, and proceed to trial. According to Groce, Anderson responded that the statute of limitations had run and that State Farm would not defend Hubbard. Anderson maintains he told Groce that State Farm would discuss the lawsuit with him when Harwell received proper service and forwarded all papers pertaining to the suit to State Farm. He denies telling Groce that State Farm refused to undertake Hubbard’s defense. In November 1989, Harwell qualified as administrator of Hubbard’s estate. On March 15, 1990, Groce filed the Leathermans’ first amended petition, again naming “Tammy D. Hubbard, Deceased” as the defendant. The amended petition did not name Harwell or Hubbard’s estate as a party to the suit. The petition recited, however, that Hubbard’s estate could be served through Harwell, the permanent administrator of Hubbard’s estate. Harwell did not send a copy of the amended petition or any other papers pertaining to the suit to State Farm.
In March 1990, Harwell filed a waiver of citation and a general denial on behalf of Hubbard’s estate. The trial court issued a notice setting the case for trial in August 1991. Harwell did not send a copy of the notice to State Farm. Although Harwell appeared pro se at the trial, she offered no evidence or arguments in defense of Hubbard. On September 20, 1991, the trial court rendered judgment for $74,679 in damages and prejudgment interest, plus court costs and postjudgment interest, against “Tammy D. Hubbard, Deceased.” Harwell did not notify State Farm of the judgment. However, on October 21, 1991, one day after the expiration of the time to file a motion for new trial or perfect an appeal, Groce sent a second letter to State Farm, enclosing a copy of the judgment and seeking its enforcement against Hubbard’s policy. State Farm subsequently commenced this action against Harwell and the Leathermans, seeking a declaratory judgment that it was not responsible under the policy for the judgment against Hubbard.
State Farm moved for summary judgment. State Farm claimed that Harwell’s failure to promptly forward notice or legal papers related to the suit prejudiced it as a matter of law. The trial court granted State Farm’s motion for summary judgment.
The notice of suit provision of Hubbard’s policy provided in pertinent part:
We must be notified promptly of how, when and where the accident or loss happened. Notice should also include the names and addresses of any injured persons and of any witnesses. If we show that your failure to provide notice prejudices our defense, there is no liability coverage under the policy. A person seeking coverage must:
1. Cooperate with us in the investigation, settlement or defense of any claim or suit.
2. Promptly send us copies of any notices or legal papers received in connection with the accident or loss.

One of the purposes of a notice of suit provision in an insurance policy is to notify the insurer that the insured has been served with process and that the insurer is expected to defend the suit. Compliance with the notice of suit provision is a “condition precedent to the insurer’s liability on the policy.”
Until State Farm received notice of the suit, it had no duty to undertake Hubbard’s defense.