Does the consent clause in a personal injury policy need to be changed to terminate coverage?

To be sure, as Doe Run now stresses, the policyholder in Johnston v. Sweany did not comply with the policy's cooperation provisions in several more ways than just not seeking the insurance company's consent for the amount of settlement. But those additional malfeasances do not vitiate the fact that court considered one of them - the violation of the consent clause - to be sufficient to terminate coverage.

It is revealing what the Johnston v. Sweany court did not do in regard to the insurer's need to show prejudice. The opinion does not, for example, say that the insurer had to present evidence that the amount for which the policyholder settled was too high, or to show that, hypothetically, the insurer could have kept the amount lower if it had been involved in the negotiation. It was the exclusion itself that constituted sufficient prejudice. The court was plain that the very fact of depriving the insurer of the "the opportunity to protect its interests" by disputing the amount of coverage carried the

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insurer's burden of establishing prejudice so as to allow the insurer to "escape coverage." (Johnston v. Sweany, supra, 68 S.W.3d at pp. 401, 402, italics added.)