Notice Delayed, Coverage Denied: Claims-Made Policies Exempt from Notice-Prejudice Rule Codified in Utah Statute
A federal district court in Utah, applying Utah law, has determined that an insurer could deny coverage under a claims-made policy for untimely notice without proving prejudice. Geneva Rock Prods., Inc. v. QBE Ins. Corp., 2025 WL 1938772 (D. Utah July 15, 2025).
The insured had a claims-made Employment Practices Liability insurance policy for the policy period of August 21, 2017 to August 21, 2018, which required the insured to give notice of any claim as soon as practicable. The policy further mandated that the insurer could not assert that a claim was untimely without a showing of material prejudice, unless notice was provided more than 60 days after the expiration or termination of the policy period. In December 2017 and January 2018, two former employees of the insured filed Charges of Discrimination with the Equal Employment Opportunity Commission and Utah Antidiscrimination and Labor Division against the insured. The former employees ultimately filed lawsuits against the insured in October 2018 and June 2019. However, the insured did not give any notice of these matters until April 21, 2021, more than two-and-a-half years after the expiration of the policy period. The insurer thus denied coverage on the grounds that it had not been given timely notice, and the insured instituted a coverage action.
Ruling in favor of the insurer on cross-motions for summary judgment, the court held that Utah law exempts claims-made policies from the general rule requiring insurers to demonstrate prejudice in order to deny coverage based on late notice of a claim. The court noted that this notice-prejudice rule was codified in a statute, but that another provision of the Utah code—Utah Code § 31A-22-203—expressly excludes claims-made policies from this rule. The court determined that, although Utah Code § 31A-22-203 only specifically referenced one subsection of the codified notice-prejudice rule, it applied to the prejudice requirement set forth in both subsections of the rule. In so holding, the court rejected the insured’s argument that the 60-day grace period provided in the policy changed it from a claims-made policy and rendered the exception to the notice-prejudice rule inapplicable. The court explained that, while some claims-made policies may require notice during the policy period with no grace period, the inclusion of such a grace period did not change the nature of the policy as a claims-made policy that is exempt from the notice-prejudice rule under Utah law.
The court also held that the insured’s notice to its broker of the underlying matters did not constitute proper notice, as it did not comply with the clear requirements of the policy, which required that notice of any claim be provided to a specific address listed in the policy’s declarations, and there was no evidence that the insured’s broker was authorized by the insurer to accept notice of claims on its behalf.
