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Allstate Insurance Company v. State Farm Mutual Insurance Company No. 43, Sept. Term, 2000 - page 15 / 26





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provisions were conditions subsequent and that “prejudice must be shown by the insurer, if it is to be

absolved.” Id. AsamatterofMarylandcommonlaw,wedidnotappeartoadopteitherviewcompletely.

Rather, in a number of cases, we drew distinctions both between the requirements of notice and

cooperation and between non-cooperation based on false statements made by the insured and non-

cooperation based on the insured’s failure to attend depositions, hearings, or trial, or to assist in giving or

obtaining evidence regarding the accident or claim. Unfortunately, when dealing with a failure to cooperate,

as opposed to a failure to notify, we did not always make entirely clear whether we viewed non-prejudicial

conduct by the insured as not constituting a breach of the policy in the irst instance or,even if it were a

breach, as not justifying a disclaimer of coverage.

In Indemnity Ins. Co. of N.A. v. Smith, 197 Md. 160, 78 A.2d 461 (1951), we dealt with a

failure to cooperate based on the insured’s disappearance during the litigation, which, in the particular case,

we regarded as a wilful failure to attend trial and assist in giving and obtaining evidence. The insured had

noti ied the insurer of the accident, forwarded the suit papers, and given a detailedreport to the insurer,

buthadthendisappearedwithoutleavingaforwardingaddressandwasnotable to be located. We noted,

in general, that “an insured should not be charged with a breach of the co-operation clause merely because

ofimmaterialandunsubstantialfailures,”andthatitwaswell-settledthat“torelievean insurer of liability on

the ground of lack of co-operation, discrepancies instatements made by the insured must be made in bad

faith and must be material in nature and prejudicial in effect.” Id. at 164, 78 A.2d at 463 (citing State

Automobile Mutual Ins. Co. v. York, 104 F.2d 730 (4th Cir. 1939)). A different rule applied,

however, when the non-cooperation was based on the failure to attend hearings and trials and assist in

securing and giving evidence. “The failure of the insured to comply with this condition,” we held, “precludes

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