In the case of Granite State Insurance Co. v. Tandy Corp., the U.S Supreme Court was asked to determine whether a company that had been sued could recover its legal costs from an insurance policy it held, even though it did not notify the insurer about the lawsuit until after settling with plaintiffs. The court ruled in favor of Tandy Corporation, stating that under Texas law (where both companies were based), late notice does not automatically relieve an insurer of its duty to indemnify unless it can demonstrate actual prejudice as a result of delayed notification. In this case, Granite State Insurance Company failed to prove any such harm and thus was obligated to cover Tandy's settlement costs despite being notified post-settlement.

In the dissenting opinion for Granite State Insurance Co. v. Tandy Corp., it was argued that the majority's decision to allow a company to sue its insurer over an alleged breach of duty, even when no actual harm had occurred, set a dangerous precedent. The dissenting justices believed this ruling could lead to frivolous lawsuits and unnecessary legal costs for businesses and insurance companies alike. They contended that without demonstrable harm or loss, there should be no grounds for litigation in such cases. Furthermore, they disagreed with the majority's interpretation of Texas law regarding insurers' duties towards their clients; according to them, these obligations did not extend as far as the majority suggested.