Term Of The Day – Claims Made And Reported Policy
A Claims Made and Reported policy has many similarities to a Workers Comp policy. I often speak about reporting Workers Comp claims ASAP. While Workers Comp policies are not this type of policy. Many aspects are similar.
Claims Made And Reported Policies can leave an insured in a very precarious position. That is why it is beyond critical to immediately report these claims. Time is of the essence – critical.
The US District Court for the State of Arizona ruled in [Emissions Technology, Inc. v. Twin City Fire Insurance Co., 2010 WL 4579250 (D. Ariz. Nov. 4, 2010)] that an insured reported the claim too late and was barred from benefits – ouch!
The policyholder received notice of a lawsuit filed by a former officer and director in October 2006, but did not report the claim to the liability insurer until November 2008.
The liability policy’s declarations stated that “coverage applies only to a claim first made against the policyholder during the policy period … [and] notice of a claim must be given to the insurer as soon as practicable, provided that such notice is given not later than 60 days after any manager becomes aware that such claim has been made.”
Endorsement No. 1 to the policy specified that “[a]s a condition precedent to coverage under this Policy, the Insureds shall give the Insurer written notice of any Claim as soon as practicable, but in no event later than sixty (60) days after the termination of the Policy Period, or Extended Reporting Period.”
The 60-day time limit shows up very often in insurance such as the Proof of Loss notice for a property damage claim. I was a little surprised to see the time limit at 60 not at 30 days.
In any insurance situation the quicker the claim is filed, the better off the insured usually finds themselves if litigation is necessary.
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