Under typical Commercial General Liability policies, which are triggered by an “occurrence” during the policy period, an insured can safely wait until being served with a complaint to notify the insurer about the litigation. But policies written on a “claims made” basis, such as many Errors and Omissions policies or Employment Practices Liability policies, raise the specter of forfeiting any coverage at all for not notifying the insurer of a “claim” long before the insured knew that it would have to lawyer up and defend against a lawsuit.

Scottsdale Indemnity Co. v. Convercent, Inc., a recent decision from the federal court in Colorado, demonstrates this risk and the hole that an insured can inadvertently dig for itself. Continue Reading Traps await the unwary in claims-made insurance policies

The Washington Court of Appeals recently issued an unpublished opinion that should serve as a warning to policyholders pursuing coverage in Washington. On its surface, The Port of Longview v. Arrowood Indemnity Co. (Aug. 2, 2016) was a significant win for the insured. The appellate court upheld the trial court’s ruling that the insured’s primary insurers had a duty to defend and indemnify, and its excess carriers had a duty to indemnify, the Port against all claims arising from two contaminated sites. In affirming the trial court’s declaratory judgment rulings, the Court of Appeals rejected the insurers’ arguments that they had been prejudiced by the insured’s late notice, that the contamination at issue was “expected or intended” by the insured, and that the policies’ “qualified pollution exclusions” precluded coverage. Continue Reading In Washington, late notice may not preclude coverage, but it could cost you your fee claim

Insurance policies almost universally require that the insured immediately report any claim made against the insured. In the context of liability policies written on an “occurrence” basis (generally, policies where coverage is triggered at the time of an accident, no matter when the lawsuit is eventually filed by the plaintiff injured in that accident), late notice to the insurer under Oregon law does not destroy the insurer’s duty to defend and cover a loss unless the late notice somehow prejudiced the insurer. See, e.g., Employers Ins. of Wausau v. Tektronix, Inc. (Or. Ct. App. 2007) (refusing to hold that a 12-year delay was prejudicial).

But a recent California case follows a far stricter rule where the policy was issued on a “claims made and reported” basis, which is how most professional-liability (or “errors and omissions”) policies are written. In Alterra Excess & Surplus Ins. Co. v. Gotama Bldg. Engineers, Inc. (C.D. Cal. July 24, 2014), Gotama, an engineering firm, Continue Reading Failing to Timely Report a “Claim” May Leave Insureds with No Coverage