State Auto Property & Casualty Insurance Co. v. Brumit Services, Inc., 877 F.3d 355

Carl Brumit, owner of Brumit Services, struck Delores Menard with his company truck in a gas-station parking lot; Menard had minor visible scrapes and declined hospital transport. Brumit returned, gave a police statement, and believed the incident was trivial.
Brumit carried a Business Auto Liability policy from State Auto that required the insured to give “prompt notice” of any accident as a condition precedent to the insurer’s duty to defend or indemnify.
Brumit did not notify State Auto about the accident until he was served with suit 21 months later; he then notified the insurer the next day.
State Auto filed for a declaratory judgment in federal district court that it had no duty to defend because Brumit breached the policy’s notice requirement; the district court granted Brumit’s summary judgment, ruling the 21-month delay was reasonable.
The Seventh Circuit applied Illinois law (Yorkville factors) de novo and reversed: it held Brumit’s 21-month delay was unreasonable and excused no duty to defend or indemnify State Auto.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether State Auto has a duty to defend given late notice	Brumit: delay was reasonable; incident was trivial and gave no reasonable ground to expect a claim	State Auto: policy required prompt notice; 21‑month delay denied insurer timely investigation and claim-handling	No duty to defend — late notice unreasonable; insurer relieved of duty
Construction/enforceability of the notice provision	Brumit: mandatory language should be read flexibly given triviality of incident	State Auto: policy’s mandatory “must”/“prompt notice” language creates a contractual obligation to report covered accidents	Policy notice is enforceable and mandatory; insured must give reasonable (prompt) notice
Whether Brumit’s sophistication and awareness excuse delay	Brumit: lacked sophistication; reasonably believed no claim would follow	State Auto: Brumit ran a business, held multiple policies, knew about latent injuries, so should have known a claim was possible	Brumit was sufficiently sophisticated and aware that a claim might arise — weighs against him
Prejudice and diligence inquiry under Yorkville factors	Brumit: insurer not prejudiced; earlier notice wouldn’t change evidence	State Auto: delayed notice prevented timely investigation, evidence preservation, and settlement opportunities — prejudiced insurer	Prejudice (or at least lost opportunity to investigate/settle) and lack of diligence weigh for insurer

Glass v. Dachel, 2 F.3d 733 (7th Cir. 1993) (standard of review for cross‑motions on undisputed facts)
West American Insurance Co. v. Yorkville National Bank, 238 Ill.2d 177 (Ill. 2010) (five‑factor reasonableness test for notice delays)
Barrington Consolidated High School v. American Insurance Co., 58 Ill.2d 278 (Ill. 1974) (notice provisions are reasonable and permit insurer timely investigation)
Country Mutual Insurance Co. v. Livorsi Marine, Inc., 222 Ill.2d 303 (Ill. 2006) (notice requirements are conditions precedent; insurer need not prove prejudice)
American Standard Ins. Co. of Wisconsin v. Slifer, 395 Ill.App.3d 1056 (Ill. App. Ct. 2009) (mandatory notice language imposes contractual obligation)