Co-Operating With Your Insurance Company

Insurance attorneys will tell a client that they have a responsibility, under their insurance policy, to co-operate with their insurance company. If they refuse to co-operate they may lose coverage. A 2006, San Antonio Court of Appeals case illustrates this. The style of the case is, Progressive v. Trevino. Here is some info on that case.
This appeal concerns a personal injury lawsuit brought in by Hector Raul Trevino and Mario Moyeda against Alejandro Alvarado, a driver covered by automobile insurance issued by Progressive. In this lawsuit, Trevino and Moyeda obtained a post-answer default judgment against Alvarado. Although Alvarado had timely notified Progressive that he had been served with a negligence suit brought by Trevino and Moyeda, according to Progressive, he later refused to cooperate with his defense. Because Alvarado refused to cooperate, on October 16, 2003, the lawyers hired by Progressive to represent Alvarado withdrew from their representation of Alvarado. However, before withdrawing, the lawyers filed a motion to continue the trial set for October 20, 2003. On October 20th, the district court called the case, and Trevino and Moyeda announced ready. Alvarado, however, did not appear for trial. The district court proceeded to hear evidence and argument from Trevino and Moyeda. It later entered a judgment awarding $45,000 to Trevino and $25,000 to Moyeda.
After obtaining the default judgment against Alvarado, Trevino and Moyeda filed this action against Progressive, arguing that by virtue of the judgment against Alvarado, they had become judgment creditors of Alvarado and thus, had standing to bring a claim directly against Progressive as third-party beneficiaries of the insurance policy. In their petition, Trevino and Moyeda pled that all conditions precedent to bringing the suit had been satisfied. Progressive, however, in its answer, denied that all conditions precedent had been satisfied: “Alejandro Alvarado and Plaintiffs, as judgment creditors, have failed to comply with the cooperation clause contained in the policy of insurance.”
The case was tried to the bench. At trial, Trevino and Moyeda introduced three exhibits: the default judgment in the underlying case; the Progressive insurance policy; and Progressive’s responses to Trevino and Moyeda’s request for admissions. At the conclusion of Trevino and Moyeda’s evidence, Progressive orally moved for judgment, arguing that satisfaction of the cooperation clause is a condition precedent to coverage under the policy. Progressive argued that because the cooperation clause is a condition precedent, Trevino and Moyeda had the burden to show that Alvarado complied with the cooperation clause, and that by failing to present any evidence on the issue of cooperation, they had failed to prove the satisfaction of that condition. Trevino and Moyeda responded by arguing that the cooperation clause was not a condition precedent, but a covenant and that as a covenant, Progressive had the burden of proving that Alvarado did not fulfill the covenant and that Progressive was prejudiced as a result.
Here, the cooperation clause of the policy issued by Progressive says:
PART E–DUTIES AFTER AN ACCIDENT OR LOSS GENERAL DUTIES A. 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.
B. A person seeking any 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.
3. Submit, as often as we reasonably require, to physical exams by physicians we select. We will pay for these exams.
4. Authorize us to obtain:
a. medical reports which are reasonably related to the injury or damages asserted; and b. other pertinent records.
5. When required by us:
a. submit a sworn proof of loss.
b. submit to an examination under oath.

Because the cooperation clause is a condition precedent to coverage under the policy, Trevino and Moyeda had the burden of showing satisfaction of that condition. At trial, however, Trevino and Moyeda did not present any evidence that Alvarado had complied with the cooperation clause.
Because Trevino and Moyeda failed to present any evidence of cooperation and because Progressive was prejudiced as a matter of law, Trevino and Moyeda cannot recover from Progressive.