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Legal developments affecting professional liability insurers

Category Archives: “Claim”

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No E&O Coverage Where Insured Failed to Report Claim During Policy Period When It Was First Made

Posted in “Claim”, Notice of Claim
The Appellate Court of Illinois, applying Illinois law, has held that an insurer has no duty to defend or indemnify an insurance agent under an errors and omissions liability policy where the agent failed to provide notice of the claim during the policy period in which the claim was first made.  James River Ins. Co.… Continue Reading

Separate Lawsuits Part of a Single Claim First Made Prior to Policy Period

Posted in “Claim”, Related Claims and associated exclusions
The United States District Court for the District of Colorado, applying Colorado law, has held that two lawsuits were connected by the “single scheme” of a contractor to interfere with a government contract for a surveillance camera system.  Ciber, Inc. v. Ace Am. Ins. Co., 2017 WL 2537092 (D. Colo. June 9, 2017).  The district… Continue Reading

“Non-Specific,” “Boiler-Plate” Notice of Potential Claim Insufficient as a Matter of Law

Posted in “Claim”, Notice of Claim
In a significant victory for Wiley Rein’s client, a Tennessee federal court has held that an insured’s “general, boiler-plate . . . broad, [and] non-specific” notice that purported to give notice of a potential claim was untimely and insufficient to provide notice of an actual claim made during the policy period and omitted from the… Continue Reading

Insurer Not Estopped from Asserting Policy Defenses Where Insured Had Duty to Defend; Insured-v.-Insured Exclusion Does Not Bar Coverage for Claims by Former Shareholders

Posted in “Claim”, Insured v. Insured Exclusion, Related Claims and associated exclusions
An Illinois federal court, applying Illinois law, has held that an insurer who declined to advance defense costs was not estopped from asserting policy defenses in a coverage action later filed by the policyholder corporation.  Vita Food Prods., Inc. v. Navigators Ins. Co., 2017 WL 2404981 (N.D. Ill. June 2, 2017).  The court also held… Continue Reading

Insured’s Failure to Provide Notice of Demand Letter Precludes Coverage for Related Lawsuit Noticed in Subsequent Policy Period

Posted in “Claim”, Notice of Claim, Related Claims and associated exclusions
A Washington federal court has held that an insured’s failure to provide notice of a demand letter to its insurer during the policy period in which the letter was received precludes coverage under a claims-made and reported policy for a related lawsuit filed during a subsequent policy period. National Union Fire Ins. Co. v. Zillow,… Continue Reading

Initial Inquiry Letter from Office of Disciplinary Counsel Constitutes “Disciplinary Proceeding,” Triggering Notice Obligation

Posted in “Claim”, Notice of Claim
A Louisiana appellate court, applying Louisiana law, has held that an initial inquiry letter from the Louisiana Attorney Disciplinary Board, Office of the Disciplinary Counsel received by a lawyer constituted a “Disciplinary Proceeding” under a lawyer’s professional liability policy, triggering an insured’s notice obligations under the policy. Trelles v. Continental Cas. Co., 2017 WL 658249… Continue Reading

Personal Profit Exclusion Does Not Relieve Insurer of Duty to Advance Defense Costs for Other Pending Causes of Action

Posted in Allocation, “Claim”, Defense Costs, Personal Profit/Advantage exclusion
Applying Montana law, the United States District Court for the District of Montana has held that a D&O policy’s personal profit exclusion, which was implicated by a finding of conversion against an insured director, did not relieve the insurer of the duty to advance defense costs for the other remaining causes of action against the… Continue Reading

Claims Not Related When Prior Demands Would Not Have Been Covered

Posted in “Claim”, Related Claims and associated exclusions
The Court of Appeal of Louisiana, applying Louisiana law, has held that a class arbitration claim that was covered under an errors and omissions policy was not “related” under the policy’s related claim provision to two earlier contractual demands for indemnity and workers compensation first made prior to the policy period.  Williams v. SIF Consultants… Continue Reading

Court Finds EEOC Charge and Subsequent Lawsuit to Be Two Separate Claims Under Claims-Made Policy

Posted in “Claim”, Related Claims and associated exclusions
The United States District Court for the Northern District of Illinois, applying federal and Illinois law, has found that an employment discrimination lawsuit was “first made” within a professional liability policy’s policy period despite the fact that the lawsuit’s required precursor, an Equal Employment Opportunity Commission (EEOC) charge, was filed before the policy period.  John… Continue Reading

Architect’s Prior Knowledge Bars Coverage for Professional Liability Claim

Posted in “Claim”, Notice of Claim, Prior Knowledge/Warranty Exclusion
A New York federal court has held that an architecture firm is not entitled to coverage under a claims-made professional liability policy because the insured had a reasonable expectation of liability prior to the policy’s inception date.  University of Pittsburgh v. Lexington Ins. Co., 2016 WL 7174667 (S.D.N.Y. Dec. 8, 2016).… Continue Reading

Eleventh Circuit Finds Claims to be Related Even Though They Are Based on Different Legal Theories

Posted in “Claim”, Related Claims and associated exclusions
Applying Tennessee law, a federal appellate court has held that pre-policy demands and later-made claims were related notwithstanding the fact that the demands and claims may have relied on different legal theories.  Direct Gen. Ins. Co. v. Indian Harbor Ins. Co., 2016 WL 5437062 (11th Cir. Sept. 29, 2016).… Continue Reading

Litigation Hold Letter Was Not a Claim

Posted in “Claim”
The United States District Court for the Western District of Oklahoma, applying Oklahoma law, has held that a litigation hold letter requesting that an insured preserve documents did not constitute a “claim” as defined by the excess liability policies at issue.  Colony Ins. Co. v. Chesapeake Energy Corp., 2016 WL 5416517 (W.D. Okla. Sept. 28,… Continue Reading

No Coverage Available for Lawsuit Served on Insured after End of Extended Reporting Period

Posted in “Claim”
The Philadelphia County Court of Common Pleas, applying Pennsylvania law, has granted summary judgment in favor of an insurer, holding that coverage under a claims-made-and-reported policy is unavailable where an insured is not served with the lawsuit during the policy period or extended reporting period.  Wolf v. Liberty Ins. Underwriters, Inc., 2016 Phila. Ct. Com.… Continue Reading

Absent Prejudice, Untimely Notice Does Not Preclude Coverage if Notice Provided During Renewal Policy Period

Posted in “Claim”, Notice of Claim
The Delaware Superior Court, applying Delaware law, has held that an insured’s failure to provide timely notice of a claim during the applicable claims-made policy period does not preclude coverage when the insured renewed the policy and provided notice of the claim during the renewal policy period, unless the insurer can prove prejudice as a… Continue Reading

Coverage Not Illusory Where Coverage is Unavailable for Claims Failing to Satisfy a Claims-Made-and-Reported Policy’s Requirements

Posted in “Claim”
The United States District Court for the Southern District of Indiana has held that coverage under a claims-made-and-reported policy is not illusory where coverage is unavailable for claims that do not satisfy the policy’s claims-made, reporting, and retroactive date requirements.  Sunshine v. Gen. Star Nat’l Ins. Co., 2016 WL 5371848 (S.D. Ind. Sept. 26, 2016).… Continue Reading

SEC Letter and Order Directing Private Investigation Held Not to Allege Wrongful Acts

Posted in “Claim”, Wrongful Act
The United States District Court for the District of Colorado, applying Colorado law, has granted summary judgment in favor of an insurer, holding that a letter from the SEC’s Division of Enforcement advising that the agency was conducting an inquiry into a company’s operations did not allege a Wrongful Act as defined by a D&O… Continue Reading

Contract Exclusion Applies Where Insured Assumes Liability of a Third Party

Posted in “Claim”, Breach of Contract
A federal trial court, applying California law, has held that coverage for three underlying lawsuits is not barred by a contract exclusion in a professional liability policy because applying the exclusion to any claim involving a contract would render the coverage illusory. Ironshore Specialty Ins. Co. v. 23andMe, Inc., 2016 WL 3951660 (N.D. Cal. July 22, 2016). According… Continue Reading

Statutory Request for Insurance Information Is Not a Claim

Posted in “Claim”
The United States District Court for the Middle District of Florida, applying Florida law, has held that a professional liability insurer was not obligated to contribute to defense costs where it received a letter during its policy period requesting insurance information pursuant to Florida statute, and a lawsuit regarding the incident discussed in the letter… Continue Reading

Prior Acts Date Limits Insurer’s Liability for Underlying Judgment

Posted in “Claim”
The United States District Court for the Eastern District of Virginia, applying Virginia law, has held that a lawyer’s professional liability insurer’s liability was limited because the underlying action arose out of acts, errors, or omissions occurring on or before a prior acts date specified in the policy. Minnesota Lawyers Mut. Ins. Co. v. Protostorm,… Continue Reading

Due to Lack of Notice, E&O Carrier Has No Duty to Indemnify Insured Auto Insurer’s Settlement Payment Stemming from Bad Faith Claim

Posted in “Claim”, Consent to settle/incur defense costs, Notice of Claim
An Illinois federal court, applying Illinois law, has ruled that, due to lack of proper notice, an E&O insurer had no duty to indemnify its insured auto insurance company’s $7 million settlement payment stemming from a bad faith claim in an underlying auto accident lawsuit. Lexington Ins. Co. v. Horace Mann Ins. Co., 2016 WL… Continue Reading

No Coverage for Related Claims Where Insured Received Third-Party Indemnification

Posted in “Claim”, Related Claims and associated exclusions
The United States District Court for the Southern District of Texas, applying Texas law, has held that an insurance broker is not entitled to coverage under its E&O policy because its former corporate parent already indemnified it for the settlement at issue. Southwest Risk LP v. Ironshore Specialty Ins. Co., 2016 WL 2898040 (S.D. Tex.… Continue Reading

Contract and Willful Acts Exclusions Do Not Preclude Duty to Defend Tortious Interference and Copyright Infringement Claims

Posted in “Claim”, Breach of Contract, Defense Costs, Professional Services
The United States District Court for the Northern District of California, applying California law, has held that neither a breach of contract exclusion nor the implied willful acts exclusion provided for by California Insurance Code § 533 precluded an insurer’s duty to defend a lawsuit brought against its insured by one of its competitors for… Continue Reading

Letter Asserting that State Government “May” Bring an Enforcement Action if Insured Did Not “Voluntarily” Cease a Particular Activity Is a Claim

Posted in “Claim”
Applying New York law, the United States Court of Appeals for the Second Circuit has affirmed a ruling that a letter asserting that a state government “may” bring an enforcement action against the insured if the insured did not “voluntarily” cease a particular activity, is a claim. Weaver v. Axis Surplus Ins. Co., No. 14-4180-cv… Continue Reading