TEXAS SUPREME COURT ESTABLISHES NOTICE-PREJUDICE RULE FOR OCCURRENCE POLICIES

The state Supreme Court Court has denied the Motion for Rehearing in PAJ, Inc. v. Hanover Insurance Co., ___S.W.3d ___ (Tex. 2007). PAJ (by a 5-4 margin) and imposed a notice-prejudice rule in Texas for all occurrence-based insurance policies – even those which do not contain the Texas Department of Insurance’s mandatory notice-prejudice endorsement.

PAJ arguably represents a significant departure from prior Texas case law (such as Members Mut. Ins. Co. v. Cutaia) which had held that in the absence of a specific endorsement requiring proof of prejudice, the breach of a notice condition voided coverage.

By Sid Davis

Sidney H. Davis, Jr. passed away on October 26, 2009. If you are seeking legal help, or have a question about this article or a pending legal matter, please contact Dawn Woelfel Hansen at (214) 741-1166.

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