Undefined Term “Claim” in a Claims-Made-and-Reported Policy Means a Demand for Relief or Damages

A federal district court in West Virginia has held that, in order to trigger coverage under a claims-made-and-reported policy, the policyholder must show that a demand for relief or damages was made and reported to the insurer within the policy period.  Soyoola v. Oceanus Ins. Co., 2014 WL 2778846 (S.D. W. Va. June 19, 2014).

The policyholder, a physician, had purchased a claims-made-and-reported policy with an inception date of August 1, 2004.  The insurer terminated the policy on August 1, 2009.  During the policy period, the physician received a thank you note from the parents of a child delivered by the physician in a delivery that involved serious complications, thanking the physician for saving their child’s life.  The physician testified that he believed that he would face a malpractice suit related to the delivery and promptly forwarded the note to the broker.  After the termination of the policy, the parents’ attorney notified the physician that the parents intended to file a malpractice suit against him.  The physician notified the insurer and requested coverage under the policy.  The insurer denied coverage, and coverage litigation ensued.

The court held that the physician failed to show that a claim had been made during the policy period and granted the insurer’s motion for summary judgment.  Although the policy did not define the term “claim,” the court concluded that a claim means a demand for relief or damages.  Because the thank you note was not a demand for relief or damages, the court held that no claim was made during the policy period.  The court further instructed that the policyholder’s belief that a claim may be forthcoming was irrelevant to the claims made and reported inquiry.  Accordingly, the court concluded, coverage was not triggered under the claims-made-and-reported policy.