Insurance – Commercial – Claims Made & Reported Policy – Renewal

GS2 Engineering & Environmental Consultants, Inc. v. Zurich American Insurance Co. (Lawyers Weekly No. 002-109-13, 15 pp.) (Cameron McGowan Currie, J.) 3:12-cv-02934; D.S.C.

Holding: Even though the plaintiff-insured renewed its policy with the same insurer, since the policy was a claims-made-and-reported policy, and since plaintiff received notice of a claim during one policy period but didn’t report it to the insurer until the next policy period, the claim is not covered.

The court grants defendants’ motion for summary judgment.

While the confusion as to which insurance company is responsible is understandable given the communications between the parties, there is no evidence that the parent company wrote the policies at issue. Neither is there any evidence that the subsidiary has denied that it is responsible for any covered claim. The parent company is entitled to summary judgment.

The basic nature of claims-made-and-reported policies requires that claims be both made against the insured and reported to the insurer during the same policy period. The reporting period may be expanded by contractual terms such as those found in the extended reporting period (ERP) included in the policy at issue.

Renewal of a claims-made-and-reported policy does not modify the requirement that claims be reported in the same policy period in which they are received unless an ERP applies. Each policy year represents an agreement as to a specific period during which claims made and reported will be covered.

Plaintiff’s policy clearly and repeatedly advises that coverage requires a claim to be made and reported during the same policy period. Any ambiguity which might be found in the ERP, when read in isolation, is clarified by the language in the introductory and basic coverage provisions. The policy even alerts the insured that such terms “may be different from other policies an insured may have purchased.”

Even if the court were to find the ERP provisions ambiguous, it would, at most, construe them to extend the automatic 30-day ERP to renewed policies. Here, that would not lead to a different result: The claim was made against plaintiff no later than April 14, 2010, when its attorney accepted service of a lawsuit filed against it. Plaintiff’s policy period ended on August 7, 2010, but plaintiff did not communicate with the insurer about the claim until Nov. 12, 2010 – and that was in response to an inquiry from the insurer after it received notice from counsel for the plaintiff in the underlying action.

The court rejects plaintiff’s arguments that all policies should be treated as a single continuous policy or the reporting period for the 2009 policy should be extended into the 2010 policy period.

Summary judgment for defendants.