No Coverage for Claims Made After Statutory Coverage Extension Period Upon Notice of Policy Non-Renewal

The Court of Appeals of Minnesota, applying Minnesota law, has held that claims made after a statutory 60-day coverage extension period after an insured receives notice of policy non-renewal from an insurer are not covered under a claims-made policy.  Minn. Joint Underwriting Ass’n v. Jacy, LLC, 2016 WL 3223180 (Minn. Ct. App. June 13, 2016).

After the insured, an adult residential care facility, failed to complete a renewal application, on July 11, 2011, the insurer sent the insured a letter stating that the insured’s claims-made policy was not renewed effective at the end of the policy period on July 1, 2011.  The July 11 letter offered the facility an extended reporting period endorsement for additional coverage.  The facility declined the endorsement.  In June 2012, the facility received notice that a client’s estate was bringing a wrongful-death action against the facility, and notified the insurer of the claim.  The insurer denied coverage on the basis that the claim was not made during the policy period and sought a declaratory judgment that it had no duty to indemnify.

The trial court granted summary judgment for the insurer, and the appellate court affirmed.  The insured argued that, since the insurer did not give notice of nonrenewal at least 60 days in advance, as required by Minnesota law, the policy automatically renewed for an additional year.  The court rejected that argument.  The court noted that the Minnesota statute that establishes the 60-day requirement for notice of nonrenewal also provides the remedy if an insurer fails to provide sufficient notice – the policy remains in place until 60 days after the notice of nonrenewal is provided.  The court opined that no coverage existed here because the claim indisputably was made almost one year after the notice of nonrenewal.  Accordingly, because the claim was made after the 60-day statutorily mandated extension period, coverage was unavailable.