Justice Insurance Reciprocal v. Hutchison, 15 S.W.3d 811 (Tenn.2000), requires a showing of prejudice in order for an insurance company to defeat liability, even if the insured individual has failed to abide by the terms of the policy. In a diversity action involving an insurance contract, a federal, court applies the substantive law of the forum state. See Erie R.R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938); Equitable Life Assur. Soc. of U.S. v. Poe, 143 F.3d 1013, 1016 (6th Cir.1998). A federal court must follow the decisions of the state’s highest court when that court has addressed the releva en its full effect and treated as though the decision existed during the pendency of the action before the district court. See Huddleston, 322 U.S. at 236, 64 S.Ct. 1015 (<HOLDING>). Therefore, we must apply both Alcazar and
holding that when applying state law this court follows the decision of the highest state court or in the absence of such a decision and any indication that the highest court would rule differently the decisions of the states intermediate courts holding that when there is no ruling by the states highest court it is the duty of the federal court to determine as best it can what the highest court of the state would decide holding that federal courts must accept the decision of the states highest court even if it is an erroneous one holding that when applying state law a federal court is bound to follow the highest court in the state holding that until the case is no longer sub judice federal courts must apply state law in accordance with the then controlling decision of the highest state court