The New Jersey Appellate Division reversed the trial court’s summary judgment order in this personal injury case. In August 2012, KnightBrook issued a commercial automobile policy providing liability coverage for the defendant’s vehicle associated with her taxi business. KnightBrook’s policy contained a provision known as the duty of an insured to cooperate, governing the responsibilities of an insured in the event of an accident, claim, injury, or suit. Under this provision, the defendant had a contractual obligation to notify KnightBrook of any accident, cooperate and assist KnightBrook in matters relevant to any claim or suit, submit to an examination, and provide statements under oath. In 2013, the defendant’s taxi rear-ended the co-defendant’s vehicle. In September 2014, the co-defendant filed a personal injury action against the defendant. The defendant did not notify KnightBrook that she was served with the complaint, and she did not provide a copy of the complaint to KnightBrook. KnightBrook sent a letter to a person the defendant designated to receive communications. The letter advised KnightBrook would handle the defendant’s defense in the personal injury action under a strict reservation of rights based on the defendant’s continued refusal to cooperate with counsel. Nothing in the reservation of rights letter suggested a dispute concerning coverage for the accident. The defendant did not appear for her court-ordered deposition. KnightBrook informed the defendant it was withdrawing her defense in the personal injury action and would not provide coverage for the accident. Because the defendant violated the conditions of her insurance policy by refusing to cooperate and failing to appear for her court-ordered deposition, KnightBrook declared the defendant forfeited coverage for the personal injury action. KnightBrook filed a declaratory judgment action, requesting the court validate its disclaimer of insurance coverage based on the defendant’s failure to cooperate. The trial court found that KnightBrook established appreciable prejudice and was entitled to disclaim coverage based on the defendant’s failure to cooperate in the personal injury action. The Appellate Division reversed, holding that KnightBrook failed to demonstrate appreciable prejudice to be entitled to disclaim the defendant’s coverage.
