Justices Find Insured Violated Auto Policy Notice Stipulation

By Don R. Sampen, published, Chicago Daily Law Bulletin, July 21, 2026

The 1st District Appellate Court, applying the so-called Livorsi factors, recently held that notice of an accident was late to an insurer, thereby precluding coverage for a claim brought by an injured passenger.

The case is American Alliance Casualty Co. v. Aguirre, 2026 IL App (1st) 242194. The insurer, American, was represented by Freeman Mathis & Gary LLP of Chicago. The Curcio Law Offices (now known as Curcio & Casciato) of Chicago represented the injured claimant, Luis Mercado.

In 2019, Mercado was a passenger in an automobile owned and operated by Jose Aguirre when their vehicle was involved in accident with a vehicle owned and operated by Hector Quinones. Three days after the accident Aguirre contacted his insurance broker to request that the automatic premium payments on his policy with his insurer, American, be discontinued because his car was totaled.

While Aguirre testified he believed he was notifying his insurer of the accident by contacting the broker, Aguirre had been in a previous accident where he was told to contact American directly, which he did. On this occasion, however, the broker did not instruct Aguirre to notify American.

The American policy contained a condition requiring that it be notified in writing “within 30 days of any accident … regardless of fault.”

Nearly two years later, the passenger, Mercado, who had been severely injured in the accident, sued both Aguirre and Quinones, the driver of the other car, alleging both were negligent in the operation of their respective vehicles.

A few weeks later, Aguirre notified American of the lawsuit by telephone, and American filed this declaratory judgment action, seeking a finding of no coverage due to late notice.

In the lawsuit, Mercado argued that no material breach of the policy occurred, but the trial court disagreed and granted summary judgment for American. Mercado followed with this appeal.

Analysis

In an opinion by Justice Celia G. Gamrath, the 1st District affirmed. She began by observing that most auto policies require notice “immediately” or “as soon as practicable,” which the courts interpret to mean “within a reasonable time.” That standard depends on the facts and circumstances of each case.

Gamrath found that the American policy’s 30-day notice requirement would likewise be construed as requiring notice “within a reasonable time,” because construing it strictly would diminish the practical value of the policy.

She then turned to the Supreme Court’s decision in Country Mutual Insurance Co. v. Livorsi Marine Inc., 222 Ill. 2d 303 (2006), to determine what was reasonable. The factors used to determine reasonableness set forth in that case included (a) the policy’s specific language, (b) the insured’s sophistication, (c) the insured’s awareness of an event requiring notice, (d) the insured’s diligence in ascertaining whether coverage was available, and (e) prejudice to the insurance company.

As to the first factor, Gamrath observed the facts were undisputed that Aguirre waited two years to provide notice to American, so this factor weighed heavily in favor of American.

Regarding the insured’s sophistication, she noted that Aguirre had experience with another accident, which alerted him to the necessity of notifying American directly.

The third factor was Aguirre’s awareness of the event triggering coverage, and here Aguirre was aware based on not just the policy language, but also his prior experience with an accident and his phone call to his broker asking to stop insurance payments.

On the fourth factor, diligence, Gamrath found there was nothing in the record showing that Aguirre took prompt action to find out whether policy coverage existed, such as reading his policy or asking his broker for information.

Finally, regarding prejudice, Gamrath wrote that lack of prejudice to American did not dispense with the requirement of reasonable notice. Here, moreover, a showing of prejudice was not required because Aguirre’s notice was patently unreasonable under the circumstances.

The court therefore affirmed summary judgment in favor of American.

Justice Aurelia Pucinski concurred in the result but suggested that the legislature ought to “level the playing field by adding sensible requirements for insurance agents” to give notice.

Key Point

The Livorsi factors continue to apply to evaluate the timeliness of an insured’s notice of a claim or occurrence to the insurer for purposes of complying with an insurance policy notice requirement.