The U.S. District Court for the District of Puerto Rico recently granted summary judgment in favor of Liberty International Underwriters after determining that coverage was not created by waiver or estoppel for a claim first made six months before the policy period of a claims-made policy. In Galarza-Cruz v. Grupo Hima San Pablo Inc., the plaintiff sued multiple defendants, including the insured and Liberty, in connection with various claims under Title VII and multiple ... Keep Reading »
Claims-made and Reported
Seventh Circuit Rejects Insured’s “Claim Within a Claim” Argument
The Seventh Circuit Court of Appeals recently had occasion to clarify the parameters of a “claim” in insurance policies. In Market Street Bancshares Inc. v. Federal Insurance Co., Judge Kanne penned an opinion holding that a legal argument appearing in an already uncovered “claim” cannot itself constitute a “claim” for purposes of liability policies. This insurance coverage dispute involved an almost two-decade-long underlying lawsuit against the insured, a bank, long ... Keep Reading »
New York Federal Court Finds Insured’s Failure to Provide Notice of Subpoena Did Not Bar Coverage for Later Lawsuit
Applying New York law, the U.S. District Court for the Southern District of New York held that because a subpoena duces tecum previously issued to the insured by a post-judgment creditor of a non-insured entity was not a "claim" against the insured, the subpoena and a later-filed lawsuit against the insured could not qualify as "related claims" deemed first made when the subpoena was issued. The court also held that the "warranty exclusion" in the application for the ... Keep Reading »
Ohio Appellate Court Rejects Policyholder’s Notice-Prejudice and Continuity of Coverage Arguments
Claims-made liability insurance policies typically require the policyholder to notify the insurer of a claim within a set amount of time — typically during the policy period, or within a specific period of time after the end of the policy period — to obtain coverage. When policyholders fail to do so, they often argue that the “notice-prejudice rule” should apply, such that the insurer can only deny coverage if it was prejudiced by the policyholder’s untimely notice. ... Keep Reading »
Related Decisions: Three Recent Cases Emphasize Breadth of “Related Wrongful Acts”
Third-party liability policies often include aggregation clauses. As the name suggests, these clauses aggregate "related claims" or "interrelated wrongful acts" into one claim or occurrence. This provides the parties with certainty as to when a claim was "first made" or when an occurrence "first occurred." These clauses often lead to litigation, with carriers and policyholders asserting narrow or broad readings of the language, depending on the desired result. A trio ... Keep Reading »
Six Degrees of Separation: Eleventh Circuit Upholds a Broad ‘Related Claims’ Provision
“Related Claims” provisions in directors and officers (D&O) and errors and omissions (E&O) policies, while common, can spawn disagreement as to scope and application. Beyond these substantive questions, an issue arises as to what information a court may consider in determining whether two or more claims are “related” within the meaning of a given policy. The Eleventh Circuit recently analyzed this issue in Health First, Inc. v. Capitol Specialty Insurance ... Keep Reading »
Defining ‘Logical Connection’: NC Federal Court Tackles ‘Related Claims’
Insurance carriers and policyholders often argue about the scope of policy provisions. Generally, policyholders take an expansive view of insuring agreements, while carriers often construe them more narrowly. But not all coverage arguments follow these familiar lines. Take, for instance, the “related claims” debate. Most third-party liability policies contain aggregation language. Such policies deem “related claims” to be a single claim “first made” when the first ... Keep Reading »
SDNY Rules SEC Investigation Is A “Claim” Within Pending and Prior Acts Exclusion
The U.S. District Court for the Southern District of New York has held that a long-running investigation by the SEC constituted a “Claim” triggering the pending and prior claims exclusion in an excess directors and officers (“D&O”) policy. See Patriarch Partners, LLC v. AXIS Ins. Co., No. 16-cv-2277 (VEC) (S.D.N.Y. Sept. 22, 2017). This case stems from a high-profile SEC investigation into plaintiff Patriarch Partners, LLC (“Patriarch”) relating to certain ... Keep Reading »
“Arising” tide for insurers: 11th Circuit takes expansive view of Prior Acts Exclusion
Claims-made policies often cover acts that occur before a policy period, so long as they result in a covered claim during the policy period. This is a fundamental difference between claims-made and occurrence policies. But the retroactive scope of a claims-made policy is not limitless. Many claims-made policies contain 'retroactive dates' that cut off an insurer's liability for occurrences before that date. Financial lines claims - as opposed to bodily injury or ... Keep Reading »
Colorado Takes A Stand Against Unauthorized Settlements
The “notice-prejudice” rule gives a pass to policyholders who breach the notice or cooperation provisions of their policies, if the breach is found not to have prejudiced the insurer. Sometimes, the late notice does not arrive until after the policyholder has settled an underlying claim; even in those cases—and even where the policy contains a “no voluntary payments” or a “consent-to-settle” clause—dozens of cases have found that the notice-prejudice rule applies. Last ... Keep Reading »