Ninth Circuit Decision Highlights Insurer’s Duty to Defend Despite Imperfect Notice

In Integon Preferred Ins. Co. v. Wilcox, Nos. 25-5424, 25-5424 25-5424, 2026 LX 229634 (9th Cir. (Wa.) June 2, 2026), the Ninth Circuit reversed a district court ruling granting summary judgment to the insurer. The lower court determined that Integon’s duty to defend was excused because Mr. Wilcox did not alert them of the underlying lawsuit until after a default judgment had already been entered. The court determined this was sufficiently prejudicial to satisfy the requirements of Washington’s “notice-prejudice” standard. Mut. of Enumclaw Ins. Co. v. USF Ins. Co., 164 Wn. 2d 411, 426–27 (2008) (“[T]he insurer is not relieved of its duties under the insurance contract unless it can show that the late notice caused it actual and substantial prejudice.”) On appeal, the Ninth Circuit panel disagreed, pointing to evidence of a phone call between Mrs. Wilcox and an Integon representative in which she stated "[T]he reason I'm calling is two years has gone by and we hadn't heard anything about this lawsuit." While there was some ambiguity as to what lawsuit was referenced, the court determined that uncertainty was enough to overturn the summary judgment order.

This ruling is particularly important in a case applying Washington law. In other states, insurers can attempt to circumvent a notice-prejudice standard by invoking a policy’s “Voluntary Payments” provision. Standard Commercial General Liability (“CGL”) policies contain a “Voluntary Payments” clause, which states the insurer must not “voluntarily make a payment, assume any obligation, or incur any expense for damages [or] loss[.]” Courts have recognized that this language cannot be enforced literally as it is written, but, interpreted broadly, these provisions could allow insurers to bypass state laws requiring prejudice for late notice.

Washington is one of the few states that has affirmatively shut down such arguments. Griffin v. Allstate Ins. Co., 108 Wash. App. 133, 139–141 (2001) (“Allstate urges . . . that the majority of states disallow recovery of pre-tender defense costs . . . but . . . in Washington the rule is otherwise. . . . [A]n insurer’s duty to defend arises upon the filing of a covered complaint, and the duty is not excused against late notice unless the insurer is prejudiced. . . . [In Washington,] ‘the insurer is not relieved of its duty to defend unless it can prove that the late notice resulted in actual and substantial prejudice.’”) (quoting Unigard Ins. Co. v. Leven, 97 Wash. App. 417, 427 (1999)). Given this standard, the Ninth Circuit’s holding in Wilcox is particularly impactful as the insurer cannot rely on the “Voluntary Payments” provision if late notice is overlooked.