In President and Fellows of Harvard College v. Zurich American Insurance Company, the U. S. District Court for the District of Massachusetts discussed the basis for its strict enforcement of an excess insurance policy’s notice requirement.
Harvard sought coverage from its excess insurer, Zurich, under a “claims-made-and-reported insurance policy” for an underlying lawsuit against Harvard regarding challenges to its admission policies. The underlying suit was filed in November 2014. Harvard gave notice to its primary insurer within days after the lawsuit was filed but did not give notice to Zurich until nearly three years after the suit was filed and nearly two years after the policy had expired.
The primary policy provided coverage for certain claims that were (1) made against Harvard during the policy period of November 1, 2014 to November 1, 2015 and (2) reported in compliance with the terms of the policy. The policy included a notice provision that stated, as a condition precedent to coverage, Harvard was required to provide written notice of any claim to its insurer no later than ninety days after the end of the policy period. Zurich’s policy with Harvard was a “follow form” policy, and unless otherwise stated, incorporated the terms, conditions, and limitations of the primary policy, including the notice provision. As a result, Zurich’s policy required timely, written notice of any claim to Zurich as a condition precedent to coverage. Zurich’s policy also specifically stated that any such notice to Zurich must be sent to a specified address. Accordingly, Harvard’s notice to its primary insurer would not constitute proper notice to Zurich.
In granting Zurich’s summary judgment motion, the court held that Harvard failed to satisfy a condition precedent, which therefore eliminated Zurich’s coverage responsibilities. The court provided several reasons to support its decision. First, Massachusetts law clearly outlines strict enforcement of the unambiguous terms of an insurance policy, such as the subject notice provision. The court noted it was undisputed that the Zurich policy characterized the notice requirement as a condition precedent to coverage, and the court discussed that a failure to satisfy a condition precedent may render the obligations attached to the condition unenforceable.
Next, the court found that coverage is barred for an insured who fails to comply with the notice provision of a claims-made policy, agreeing with Zurich that Massachusetts courts “leave no wiggle room” for noncompliance and detailing that for claims-made policies, an insured providing notice within the policy period “is the essence in determining whether coverage exists.” The court affirmed that a lack of prejudice does not excuse noncompliance with the notice requirement, reasoning that requiring the insurer to show prejudice corrupts the fundamental concepts on which claims-made policies are based.
Finally, the court found that actual or constructive knowledge also does not excuse noncompliance with the notice requirements. While Harvard argued that the underlying action received significant national and local news coverage, and therefore Zurich either had actual notice of the underlying claim prior to the end of the policy period or Zurich “willfully shut its eyes to the means of acquiring knowledge which it knows are at hand,” the court disagreed and found that even if Zurich had actual or constructive knowledge, Harvard had no excuse for failing to meet its obligations under the policy. Thus, finding Harvard’s arguments “unavailing” and “unsupported by case law,” the court granted summary judgment for Zurich, bolstering the widely supported view in Massachusetts that notice provisions in claims-made policies must be strictly construed.
