Garbin Street Warehouse, LLC v. Bridgeway Insurance Co.,
2026 Ind. App. LEXIS 240 (Ind. Ct. App. 2026)
A warehouse owner insured its warehouse through a primary insurer and several excess insurers. The insured’s policies included a Protective Safeguard Endorsement that included the following notice condition:
If part of an Automatic Sprinkler System… is shut off due to breakage, leakage, freezing conditions or opening of sprinkler heads, notification to [the insurer] will not be necessary if you can restore full protection within 48 hours.
On December 23, 2022, a maintenance contractor discovered that one of the risers to the warehouse’s sprinkler was frozen and broken. On December 27, 2022, the contractor met with a sprinkler service company about the issue and repairs were scheduled to occur on January 3, 2023. Unfortunately, a fire occurred at the warehouse on December 31, 2022, resulting in its complete destruction.
After the insured notified the insurers of the fire, the insurers denied the claim because the insured failed to provide notice of the sprinkler malfunction within 48 hours of learning of it. Consequently, the insurers contended that the insured failed to comply with a pre-loss condition of the policy.
After the warehouse owner sued the insurers, it filed a motion for partial summary judgment contending that pursuant to Indiana law, the insurer was required to demonstrate prejudice from the insured’s failure to comply with the notice condition. In support of that argument, the insured relied upon post-loss-condition cases where courts required the insurers to demonstrate prejudice from the condition violation in order to determine that the policy was breached and no coverage was owed.
The insurers filed their own cross-motion for summary judgment contending that the requirement of prejudice to the insurer applied only to violations of a post-loss policy condition, such as an insured’s failure to cooperate with the insurer or the insured’s failure to provide timely notice of claim or loss to the insurer. Because the condition at issue in this case involved a pre-loss condition, the insurers argued, prejudice to the insurer for the insured’s breach was not required.
The Trial Court denied the insured’s motion for partial summary judgment and granted the insurers’ cross-motion, concluding that the insurers were not required to demonstrate prejudice in order to enforce the condition. On appeal, the
Court distinguished the requirement of showing prejudice to the insurer for pre-loss and post-loss situations. In explaining the requirement of prejudice in post-loss situations, the Court explained that in late notice of loss situations, the insurer generally suffers prejudice by not having an opportunity to investigate the loss. The Court recognized that the Indiana Supreme Court has established that insurance companies are free to limit their liability in any manner that is consistent with public policy.
In this case, the condition at issue was clear and required the insured to notify the insurer if the sprinkler system malfunction could not be remedied within 48 hours. The Protective Safeguard Endorsement was afforded to the insured in exchange for reduced premiums. While the outcome appears harsh, the case illustrates that Indiana courts will enforce unambiguous policy language as written. It was undisputed that the insured failed to provide the required notice before the fire occurred. Because the insured did not satisfy this pre-loss condition, the policy provided no coverage.