December 30, 2019 Articles

Insurance for Litigators: Pitfalls to Avoid under Claims-Made-and-Reported Policies

Understanding coverage nuances under claims-made-and-reported policies is crucial—even a one-day delay could be the difference between millions of dollars in coverage and no coverage at all.

By Jonathan G. Brinson

Consider a common situation: Your client has a professional liability insurance policy with a policy period from June 1, 2018, to June 1, 2019. On August 1, 2018, your client forwards to you a letter from Company X, alleging that your client’s services on a major project resulted in damages. Company X demands payment by August 31 or it will seek resolution in court. Being an excellent attorney, you send a strong response on August 31 pointing out not only that your client rendered exceptional services but that your client is still owed unpaid amounts for its services. Following a months-long letter campaign that proves fruitless, Company X files a lawsuit on June 1, 2019, against your client and related entities. The very next day, June 2, you diligently tender this claim to your client’s professional liability carrier. Two weeks later, you are surprised to receive the insurance carrier’s denial letter. Three years later, your client forwards to you a lawsuit filed by Company Y arising from the same project. You once again promptly tender the filing to the insurance carrier, but two weeks later you once again receive a denial letter for this new claim. What went wrong?

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