KNIGHTBROOK INSURANCE COMPANY VS. CAROLINA TANDAZO-CALOPINA, ET AL. (L-1056-20, ESSEX COUNTY AND STATEWIDE) (A-1115-20)
The court clarified when an insurance company may be relieved of providing insurance coverage to an insured who refuses to cooperate in defending a personal injury victim's claim pursuant to the terms of the insurance policy. An insurance company's satisfaction of either of the two variables identified in Hager v. Gonsalves, 398 N.J. Super. 529 (App. Div. 2008), constitutes appreciable prejudice sufficient to forfeit any obligation on the part of an insurance company to provide coverage to an insured.
Under the first variable, a trial court must determine whether an insurer's substantial rights have been irretrievably lost as a result of the insured's breach of the insurance policy. Under the second variable, a trial court must examine an insurer's likelihood of success in defending against an accident victim's claim had the insured not failed to cooperate.
In analyzing the appreciable prejudice variables, the court held the first variable applied to an irretrievable loss of substantial rights related to coverage determinations by an insurer. To conclude otherwise would render the second appreciable prejudice variable redundant. The two variables are intended to address different aspects of appreciable prejudice.
