Wyoming Supreme Court Decision

The United States Court of Appeals for the Eighth Circuit certified a question to the Wyoming Supreme Court concerning the enforceability of an insurance policy notice provision under Wyoming law. In Century Surety Company v. Hipner, (Wyo. 08/17/16), the Wyoming Court provided the answer to that question, holding that, under Wyoming law, an insurer must be prejudiced before being entitled to deny coverage when the insured has failed to give notice “as soon as practicable.” Noting that this issue had never been addressed, the Wyoming Supreme Court determined that, as with a majority of jurisdictions, Wyoming law required an insurer to be prejudiced. It adopted a two-step approach to an insurer’s claim of late notice. Under this approach, a court must first determine that an insured’s notice was untimely, in violation of the notice requirement contained in the insurance policy. The court set forth a number of factors to be considered in making this determination, including the language of the notice requirement in the policy, the timing of the notice, the insured’s knowledge of the underlying facts and ability to provide notice, the sophistication of the parties, the type of insurance at issue, and the reasonableness of any delay. Once a trial court has determined that notice was untimely, it is to turn to the question of whether the insurer was prejudiced by that delay. The Court held that only if the insurer was prejudiced, would it be relieved of its obligation to provide coverage. Unfortunately, the Supreme Court did not discuss in any detail what it considered relevant in making the determination of when an insurer is prejudiced. A second issue addressed by the Court was whether language in the policy which excluded coverage unless the insured notified the Century “as soon as practicable . . . whether [the insurer] [is] prejudiced or not.” The Court held that the language was void as against public policy and that Century could not circumvent that rule by simply adding language to its policy.