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Executive Summary Blog

Legal developments affecting professional liability insurers

Category Archives: “Claim”

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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

Letter Seeking Disbursement of Funds Pursuant to Agreement Was Not “Claim”

Posted in “Claim”, Notice of Claim
The United States District Court for the Western District of Missouri has held that a letter requesting payment of funds pursuant to an agreement was not a demand for monetary relief and therefore not a “claim” under a claims-made D&O policy. Phila. Indem. Ins. Co. v. Cmty. Found. of the Ozarks, Inc., 2016 WL 837951… Continue Reading

Environmental Claims Arose from Prior Orders and Deemed Not First Made During Relevant Policy Period

Posted in “Claim”, Related Claims and associated exclusions
A federal district court in Washington has held that an insurer had no duty to defend four environmental claims brought against an insured by state and federal agencies because the claims at issue were either first made prior to the policy period or fell within the scope of an exclusion barring coverage for claims related… Continue Reading

Managed Care E&O Policy Covers Suit Alleging Unfair Competition by Competitors

Posted in “Claim”, Wrongful Act
A California federal court has held that a managed care organization E&O policy provided coverage for a suit alleging unfair competition, and was not limited to coverage for suits brought by the insured’s customers or clients. EYEXAM of Cal., Inc. v. Allied World Surplus Lines Ins. Co., 2015 WL 7015414 (N.D. Cal. Nov. 12, 2015).… Continue Reading

Policies Do Not Provide Coverage for Claim Stemming from Pre-Continuity Date Subpoena and Acts of Subsidiary Prior to Acquisition by Insured

Posted in “Claim”, Excess insurance/exhaustion, Notice of Claim
A Louisiana intermediate court of appeals has affirmed a district court’s holding that the insurance policies at issue covered only those wrongful acts that occurred after the dates the policies were issued and that a letter from the U.S. Department of Labor stating that it was conducting an investigation and attaching a subpoena constituted a… Continue Reading

Coverage for DOJ Investigation Not Barred Because No Way to Determine Whether There Was Substantial Overlap with Earlier Lawsuits

Posted in “Claim”, Bad faith/duty to settle, Related Claims and associated exclusions
A federal court in California has held that an investigation did not relate back to earlier lawsuits against the insured, nor was coverage barred by the policy’s prior or pending litigation exclusion, because the investigation was “shrouded in secrecy,” and it was therefore impossible to determine whether the investigation or allegations arose out of or… Continue Reading

Even Without Express Demand for Money, Pre-Policy Period Letter is a “Claim”

Posted in “Claim”, Prior Knowledge/Warranty Exclusion
Applying New Jersey law, a New Jersey federal court has found that a letter to an insured law firm referencing an “action against the Firm for damages” arising out of the firm’s actions and requesting that the firm put its insurer on notice constituted a “claim” made prior to the inception of the firm’s claims-made… Continue Reading