ADJ9145976 · August 3, 2026

Petitioner failed to meet burden of proof to show lack of timely notice and prejudice required to exclude coverage under the policy.

From the decision · page 5Kemper Life Assurance Co. (1994) 7 Cal.4th 125, 148; Searle v. Allstate Life Ins. Co. (1985) 38 Cal.3d 425, 437-438.) However, “once an insured has made this showing, the burden is on the insurer to prove the claim is specifically excluded.” (Aydin, supra, 18 Cal.4th at p. 1188, citing Garvey v. State Farm Fire & Casualty Co. (1989) 48 Cal. 3d 395, 406; Searle, supra, 38 Cal.3d at pp. 437-438; Clemmer v. Hartford Insurance Co. (1978) 22 Cal. 3d 865, 880.) Here, the Petition does not appear to contest the WCA’s finding that “[t]he Declaration Page of the United States Fidelity and Guaranty Insurance policy, issued to The Schaumburg Flyers for the year 2001, indicates in item 3(a) that the policy ‘covers All States’ but that the policy does not cover certain expressed identified states. California is not an expressly-excluded and identified state and thus, California is a covered state.” (Findings #7.) Petitioner argues instead that applicant’s claim is specifically excluded under Part 3(A)(4) of the policy based on a lack of evidence of timely notice, and that the WCA failed to adequately explain his decision. However, under the Supreme Court’s holding in Aydin, supra, petitioner carries the burden of proof on this issue.

Petitioner produced no evidence that it did not receive timely notice of applicant’s claim.

Favours Applicant prevailed

Without evidence of untimely notice, coverage exclusion under the policy cannot be established.

From the decision · page 5Because petitioner adduced no evidence that it did not receive timely notice of applicant’s claim, it failed to carry its burden to show that applicant’s claim is excluded from the basic scope of insurance coverage. Furthermore, because petitioner is arguing a coverage exclusion based on lack of timely notice, it must also show actual and substantial prejudice under the notice-prejudice rule. The Supreme Court has also held that the “notice- prejudice rule is a fundamental public policy of California. The rule is based on the rationale that the essential part of the contract is insurance coverage, not the procedure for determining liability, and that ‘the notice requirement serves to protect insurers from prejudice, … not … to shield them from their contractual obligations’ through ‘a technical escape-hatch.’” (Pitzer College v. Indian Harbor Ins. Co. (2019) 8 Cal.5th 93, 105, citing Carrington Estate Planning Services v. Reliance Standard Life Ins. Co.

Petitioner produced no evidence of prejudice from delay in notice.

Favours Applicant prevailed

Under the notice-prejudice rule, insurer must show prejudice to exclude coverage; absence of such evidence favors applicant.

From the decision · page 5(9th Cir. 2002) 289 F.3d 644, 647.) Prejudice is a question of fact on which the insurer has the burden of proof. (Pitzer College, supra, 8 Cal.5th at p. 105, citing Campbell v. Allstate Ins. Co. (1963) 60 Cal.2d 303, 306.) The insured’s delay alone does not satisfy the burden of proof. (Pitzer College, supra, 8 Cal.5th at p. 105, referencing Shell Oil Co. v. Winterthur Swiss Ins. Co. (1993) 12 Cal.App.4th 715, 761.) To establish prejudice, the insurer must show “‘a substantial likelihood that, with timely notice, and notwithstanding a denial of coverage or reservation of rights, it would

Labor Code section 5705; Aydin Corp. v. First State Ins. Co. (1998) 18 Cal.4th 1183

Burden of proof rests on party holding affirmative of issue; insured must show claim within basic scope of coverage; insurer must prove specific exclusion.

Petitioner failed to prove exclusion based on lack of timely notice.

Pitzer College v. Indian Harbor Ins. Co. (2019) 8 Cal.5th 93

Notice-prejudice rule requires insurer to prove actual and substantial prejudice from late notice to exclude coverage.

Petitioner failed to show prejudice from delay in notice.

From the decision · page 5Because petitioner adduced no evidence that it did not receive timely notice of applicant’s claim, it failed to carry its burden to show that applicant’s claim is excluded from the basic scope of insurance coverage. Furthermore, because petitioner is arguing a coverage exclusion based on lack of timely notice, it must also show actual and substantial prejudice under the notice-prejudice rule. The Supreme Court has also held that the “notice- prejudice rule is a fundamental public policy of California. The rule is based on the rationale that the essential part of the contract is insurance coverage, not the procedure for determining liability, and that ‘the notice requirement serves to protect insurers from prejudice, … not … to shield them from their contractual obligations’ through ‘a technical escape-hatch.’” (Pitzer College v. Indian Harbor Ins. Co. (2019) 8 Cal.5th 93, 105, citing Carrington Estate Planning Services v. Reliance Standard Life Ins. Co.

Petitioner produced no evidence of lack of timely notice or prejudice from delay.

From the decision · page 5Because petitioner adduced no evidence that it did not receive timely notice of applicant’s claim, it failed to carry its burden to show that applicant’s claim is excluded from the basic scope of insurance coverage. Furthermore, because petitioner is arguing a coverage exclusion based on lack of timely notice, it must also show actual and substantial prejudice under the notice-prejudice rule. The Supreme Court has also held that the “notice- prejudice rule is a fundamental public policy of California. The rule is based on the rationale that the essential part of the contract is insurance coverage, not the procedure for determining liability, and that ‘the notice requirement serves to protect insurers from prejudice, … not … to shield them from their contractual obligations’ through ‘a technical escape-hatch.’” (Pitzer College v. Indian Harbor Ins. Co. (2019) 8 Cal.5th 93, 105, citing Carrington Estate Planning Services v. Reliance Standard Life Ins. Co.