Indiana Appeals Court Upholds Insurers’ Denial of Warehouse Fire Claim Over Sprinkler Notice Requirement

August 4, 2026

The Indiana Court of Appeals has ruled that a group of insurers properly denied coverage for the destruction of an Evansville warehouse after the property owner failed to comply with a key policy condition requiring prompt notice of a disabled fire sprinkler system. Garvin St. Warehouse, LLC v. Bridgeway Ins. Co., No. 25A-PL-2272, 2026 WL 2036318 (Ind. Ct. App. July 15, 2026).

On December 23, 2022, Garvin Street Warehouse, LLC discovered that part of its automatic sprinkler system had frozen and broken. Although repairs were scheduled, they could not be completed before the warehouse was destroyed by fire on December 31. The insurers denied coverage under a Protective Safeguards Endorsement (PSE), which required the insured to notify the insurers within 48 hours if a sprinkler impairment could not be restored during that 48-hour period. Garvin admitted it never provided the required notice.

The insured argued that Indiana law should require the insurers to prove they were actually prejudiced by the lack of notice before denying coverage. The company relied on prior Indiana cases holding that insurers must demonstrate prejudice when an insured violates certain post-loss policy obligations, such as cooperation clauses, or that prejudice may be rebutted in cases involving late notice of a claim. The insured maintained that the insurers would not have acted differently even if they had been notified of the sprinkler problem.

The insurers countered that the notice requirement in the PSE was fundamentally different because it was a pre-loss condition of coverage rather than a post-loss obligation. They argued that Indiana courts consistently enforce clear policy exclusions and conditions as written, without requiring proof of prejudice. According to the insurers, Garvin’s failure to satisfy the policy condition meant coverage for the fire never attached.

The Court of Appeals agreed with the insurers. The Court concluded that Indiana’s prejudice doctrine applies to certain post-loss notice and cooperation provisions but does not extend to pre-loss protective safeguards endorsements. The court emphasized that insurers are entitled to enforce clear and unambiguous policy language, particularly where the endorsement expressly stated that coverage would not apply if the insured knew of a sprinkler impairment and failed to notify the insurers within 48 hours.

Because the insured undisputedly failed to provide the required notice, the Court held that the insurers were entitled to deny coverage without proving actual prejudice. The Court affirmed the trial court’s denial of Garvin’s motion for partial summary judgment and upheld judgment on the pleadings in favor of the insurers.

For any further questions, please contact Jonathan Barger.