Belz

A homeowner entered into a contract for the construction of an additional building on his property. He later filed suit against the contractor, alleging defects in the construction. The contractor did not notify his liability insurer of the suit. A default was entered. Through an investigator, the insurer learned about the suit after the entry of default and unsuccessfully moved to set the default aside. A default judgment followed.

The homeowner then brought this action against the insurer, seeking payment on the default judgment. The insurer defended on the grounds that the insurance policy did not cover a default judgment entered without timely notice of the suit, and the insured had failed to give notice in time for the insurer to protect its and the insured’s interests.

The insurer moved for summary judgment based on the policy provisions. The homeowner argued that the insurer had to suffer prejudice as a result of the lack of notice and that a showing of prejudice had not been made. The insurer countered that prejudice was not required and that, alternatively, the default had prevented it from conducting a thorough investigation of the claim and presenting a…