Theoretically, claims made insurance coverage applies to claims made during the policy period regardless of when the underlying acts took place. The claims made arrangement contrasts with the framework under an occurrence policy, where coverage applies according to when the underlying acts took place, regardless of when the claim is made. But even though claims made coverage is intended to apply to claims made during the policy period, there are sometimes claims made policy provisions that can preclude coverage for some or all of the past acts alleged. These coverage limiting provisions can under certain circumstances substantially limit the past acts coverage available under a claims made policy.
Continue Reading Coverage Complications for Prior Acts Under Claims Made Insurance Policies

Claims made insurance policies provide coverage for claims first made during the policy period. So if the claim is made during the policy period, there’s coverage, right? Not so fast; there’s a catch. Under most claims made policies, the claim also has to be reported during the policy period or within a short period after the policy period ends. In many jurisdictions, the insurer can deny coverage for the late notice even if the delay did not prejudice the insurer in any way. The policy’s notice clause operates as a “Mother May I” provision –  even though you paid your premium, you don’t get coverage unless you say “Mother May I” and provide notice within the time limits. The problem is that policyholders muff the notice requirements all the time. We all know that. Late notice happens all the time. As a result, policyholders often get no coverage for the claims but the insurers keep the premium.
Continue Reading Why Late Notice Cases Bother Me

eighth circuitIf an insured give notice of claim to its insurer during the policy period but seven months after a lawsuit is filed, has it provided notice “as soon as practicable” as required under the policy? Not according to a May 25, 2017 decision by the Eighth Circuit. The appellate court, applying Minnesota law, affirmed the district court’s holding that the provision of notice during the policy period but seven months after the lawsuit was filed against the insured did not satisfy the policy’s “as soon as practicable” notice requirement. While the Eighth Circuit’s ruling is consistent with the rulings of other courts on this issue, I still have concerns, as noted below. The Eighth Circuit’s opinion in the case can be found here.
Continue Reading Eighth Circuit: Notice Provided During the Policy Period But After Seven Month Delay Not “As Soon as Practicable”

illinois3Under the applicable Illinois statute, an insurer may seek to rescind a policy if it was procured by an application misrepresentation if the misrepresentation was “made with the actual intent to deceive or materially affects either the acceptance of the risk or the hazard assumed by the company.” But even if rescission is otherwise