The Need for Substantial Compliance With Policy Condition

Prompt Reporting of Loss

It is always best for plaintiffs to immediately make claim to the person responsible when injured. It is equally important that the defendant, if insured, immediately notify the insurer who might owe a duty to defend or indemnify the defendant. Some delays are reasonable while others are not. In Virginia, whether an insured substantially complied with the notice requirement is factual and, unless there is no question of fact, should be determined by a trier of fact.

Detailed Pleading

In addition it is imperative that the lawyers representing the party plaintiff must carefully plead their case and inform the defendant(s) in clear and unambiguous language the reason for the suit. In Pauline Dabney v. Augusta Mutual Insurance Company, et al., No. 100841 (Va. 06/09/2011) the Virginia Supreme Court dealt with a comedy of errors that followed a serious injury and the failure of counsel to pursue defense and indemnity from an insurer and to inadequately plead the evidence the plaintiff intended to prove.


The Supreme Court of Virginia was called upon to determine whether the trial court was wrong:

1.    When it kept the jury from considering facts not alleged in the complaint; and

2.    Whether the trial court should not have ruled as a matter of law that an insured’s notice of a claim to its insurer was not made “as soon as is practical,” as required by the insurance policy.


On April 9, 2002, Pauline Dabney was in her yard when she was approached by two pit bull dogs roaming freely through her neighborhood. The dogs lunged toward her, and she fell while attempting to escape from them. Her shoulder was “knocked . . . out of place” and her arm was broken in three places as a result of the fall. Shortly after the attack, Dabney discovered that the dogs lived at the home of Elease Otey. Otey, however, had died a few weeks earlier. In July 2002, Dabney was able to confirm that Reynolds’ dogs were the dogs that attacked Dabney.

At the time of the attack, Otey held an insurance policy (the Augusta policy) issued by Augusta Mutual Insurance Company (Augusta). The administrator of Otey’s estate did not discover the Augusta policy until March 2003, when she made a claim under the policy for damages resulting from a house fire. The Augusta policy was cancelled shortly thereafter.


The Augusta policy, in effect at the time of Dabney’s injury, provides that, as a condition of coverage,

“[i]n case of an accident or ‘occurrence,’ the ‘insured’ ” must “[g]ive written notice to us or our agent as soon as is practical.” The policy also requires that the insured “[p]romptly forward to us every notice, demand, summons or other process relating to the accident or ‘occurrence.’”


Dabney finally sued Otey’s estate and in August 2003 the estate retained a lawyer. On May 5, 2004, almost a year later, the lawyer sent a letter to Augusta notifying Augusta of Dabney’s lawsuit. The lawyer sent the letter to the address provided in the Augusta policy, but Augusta had moved before the letter was sent.  August, understandably, did not respond to the lawyer’s letter.

On January 18, 2005, Dabney’s friend contacted Augusta on Dabney’s behalf, and spoke with a representative in the claims department. On April 6, 2005, Dabney’s counsel, in an attempt to settle the claim, sent Augusta a letter, which included Dabney’s medical records documenting her injuries.

In March 2006, Dabney filed a separate action for declaratory relief against Augusta. Thereafter, the trial court, over Augusta’s objection, granted Dabney leave to file an amended complaint, which added the following language: “The June 2005 notice by defendant Augusta Mutual was untimely and its failure to timely determine the question of coverage for the Otey Estate acts as a waiver of any right it may have to deny coverage.” The amended complaint also stated that Jenkins provided Augusta with the required timely notice of a claim through Hale’s May 2004 letter to Augusta. The amended complaint did not allege any other act as constituting notice to Augusta of Dabney’s injuries and subsequent claim.

After plaintiff’s case was presented Augusta moved for judgment in its favor. The trial court granted Augusta’s motion to strike Dabney’s evidence regarding Augusta’s discovery of the claim in 2005. The court ruled that Dabney was bound by the allegations in her amended complaint, which only alleged that Jenkins gave Augusta notice of Dabney’s claim in May 2004. Because the amended complaint did not allege that Augusta discovered the claim at any time in 2005, the court ruled that the jury could not consider whether Augusta had notice of the claim in 2005 for purposes of Dabney’s waiver argument.

The circuit court only allowed the jury to decide was whether Augusta received Hale’s May 2004 letter as notice of Dabney’s claim. If Augusta did not receive the letter, then the court, based on Dabney’s pleading, would conclude that Augusta’s defense of Jenkins’ breach of the policy was not waived. The court took under advisement Augusta’s motion that Jenkins’ notice under the Augusta policy was untimely as a matter of law.

In a “special interrogatory to the jury,” the jury found that Augusta did not receive Hale’s May 2004 letter. As a result of this finding, the circuit court ruled as a matter of law that notice of Dabney’s claim was never received by Augusta at any time in calendar year 2004, and therefore notice of the accident and claim was untimely under the terms of the Augusta policy. T


The law in Virginia is well established that a court cannot enter judgment based on facts that are not alleged in the parties’ pleadings. The rationale supporting this basic rule is clear, that every litigant is entitled to be told by his adversary in plain and explicit language what is his ground of complaint or defense.

In this case, Dabney’s amended complaint alleged that Hale’s May 2004 letter was Jenkins’ notice to Augusta of Dabney’s personal injury action. The amended complaint did not allege any other time when Augusta received notice or discovered Dabney’s personal injury action. Based on these allegations, the case pleaded by Dabney was limited to the theory that Augusta received notice of Dabney’s personal injury action in May 2004.

The Supreme Court concluded that the trial court’s decision properly limited Dabney to relief based on the allegations in her amended complaint. The issues in a case in Virginia are made by the pleadings not the testimony of witnesses or other evidence.  Because the amended complaint only alleged that Augusta had notice of Dabney’s personal injury action via counsel’s letter that was not received by Augusta. Therefore the trial court was correct when it refused to allow the jury to determine whether Augusta had notice of Dabney’s action in early 2005.


It is well settled in Virginia that performance of the notice provision of an insurance policy is a condition precedent to coverage, which requires “substantial compliance” by the insured. In this case, the Augusta policy provided that the insured must give Augusta “written notice” of an accident “as soon as is practical.” “The requirement that notice be given ‘as soon as practicable’ means that it must be given within a reasonable time after the accident, and what constitutes a reasonable time depends upon the facts and circumstances of each case.

Generally, whether notice has been given to the insurer ‘as soon as practicable’ is an issue to be resolved by a fact finder. In this case, however, the trial court ruled as a matter of law that a 254-day delay in providing notice was not reasonable. In making this ruling, the court only focused on the length of the delay, and failed to consider the facts and circumstances surrounding the delay.

The language in the Augusta policy that the insured give notice of an accident “as soon as is practical” means that the notice must be given within a reasonable time after the accident. In this case, the “accident” occurred when Dabney was attacked by the dogs. The timeliness of the notice of the attack must be considered in light of all the facts and circumstances presented in the case.

It took Dabney several months to locate the dogs that attacked her identify the owner of the dogs. Given the extenuating circumstances presented in this case, whether Jenkins’ notice was timely under the Augusta policy was a question of fact upon which reasonable minds could disagree. For this reason, the circuit court erred in ruling that Jenkins’ notice was untimely under the Augusta policy as a matter of law. The issue whether Jenkins’ notice substantially complied with the Augusta policy’s condition precedent – that notice of an accident be given as soon as is practical should have been submitted to the jury.


Insurance coverage issues are seldom clear and often require a finding of fact. In this case it took a presentation to the Virginia Supreme Court to force lawyers to realize that pleading must be complete and accurately advise a defendant of the facts to be presented at trial in a way that weakened their case against the insurer. In addition, the insurer’s success was short lived because the Virginia Court believed that there were factual disputes that needed to be resolved by a jury.

If an insurer is to be sued it is imperative that the conditions of the policy are met promptly and that the pleadings are clear and properly advise the defendant of the claims of the plaintiff. Finally, this case teaches that when a notice is given to an insurance company and they do not respond immediately but in no event more than 15 calendar days it is incumbent on the insured or the insured’s counsel to follow-up with the insurer by telephone, fax, e-mail or all three. The simple act of giving prompt notice, once the insured was served with a suit, is a primary duty of counsel retained by a person who is insured and there is no excuse for a ten month delay in giving notice and less excuse for failing to follow-up with the insurer.

© 2011, Barry Zalma

Barry Zalma, Esq., CFE, is a California attorney specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud. Mr. Zalma serves as a consultant and expert for insurers and policyholders. He founded Zalma Insurance Consultants in 2001 and serves as its senior consultant. He recently published the e-books, “Heads I Win, Tails You Lose — 2011,” “Zalma on Rescission in California,” “Zalma on Diminution in Value Damages,” “Arson for Profit” and “Zalma on California Claims Regulations,” and others that are available at Contact the author or access his free insurance fraud letter at or write to him at

About Barry Zalma

An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.
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