Insurer can avoid paying injury claim for postal worker's fall; under no duty to maintain pertinent underwriting file

Wael Dokho fell while delivering mail to Michael Jablonowski.  Jablonowoski lived in his mother's home for several months and renewed his mother's home-owner's policy with AAA after she died.  Dokho ultimately filed an injury lawsuit, but had to make substituted service on Jablonowski because he could not be located.  Eventually a default judgment was entered against Jablonowoski and Dokho attempted to enforce it against the AAA policy.

AAA argued that it never agreed to insure Jablonowski and didn't know that its insured had died.  It pointed to contract language that allowed it to refuse to renew the policy for a new insured and refused to pay the judgment in favor of Dokho. It also argued that it was under no duty to preserve the underwriting file which might have established that AAA had in fact agreed to insure Jablonowski after his mother died.  

The court ruled that AAA owed no duty to maintain the underwriting file, even though it was on notice of the underlying liability claim.  The court held that failing to keep the file created an inference that it would have been against AAA's interest, but did not create a presumption that there was adverse evidence in the file.  On this basis, the court then concluded that the insurer was within its rights to apply the policy language to exclude any coverage for an event that occurred after Jablonowski's mother (the "named insured") died, even though it had written a policy renewal.