Insurance Law

An insured person injured in a car accident settled with the tortfeasor and then sued his insurer for underinsured motorist benefits. The insurer claimed that the lack of notice precluded it from seeking subrogation from the tortfeasor. Writing for a unanimous court, Abrahamson brought Wisconsin law in line with that of other states. She held that an insured’s failure to give notice to his insurer that he entered a settlement with the tortfeasor creates a rebuttable presumption that the insurer was prejudiced by the lack of notice. The insured must prove that the insurer was not prejudiced.

A husband and wife jointly owned their home and were both named insureds on a fire insurance policy. When the wife sued for divorce and the circuit court ordered the husband to vacate their home, he burned it down. The insurance company refused to pay because the husband, one of the insureds, had cause the property damage. Writing for a unanimous court, Abrahamson overruled case law favoring the insurance company and held that an innocent insured under a fire insurance policy is not barred from recovering under the policy merely because another insured intentionally damaged the insured property.