Consecutively Issued Renewal Policies Do Not Create a Continuous Reporting Period

Applying Florida law, a federal district court has held that the issuance of a series of consecutive claims-made-and-reported renewal policies does not give rise to a single, continuing reporting period.  527 Orton, LLC v. Continental Cas. Co., Case No. 13-61571 (S.D. Fla. Sept. 22, 2014).  Wiley Rein represented the insurer in this case.

The insured attorney represented the buyer in connection with a real estate deal.  Pursuant to the sales contract, the buyer was required to place $250,000 in escrow in the insured’s trust account.  When the buyer defaulted under the terms of the contract, the sellers asserted an entitlement to the deposit.  Beginning in October 2005 and continuing into 2006, counsel for the sellers sent a series of letters to the insured demanding payment of the deposit.  Although the letters specifically asked the insured to place his malpractice insurer on notice, the insured did not report the sellers’ demands to his carrier.  Two years later, the sellers filed suit.  At that point, the attorney sought coverage from his insurer, which had issued a series of claims-made-and-reported policies to the attorney beginning in 2005 and continuing through 2009.  The insurer denied coverage, concluding that the sellers’ claim was first made in 2005 but not reported until 2008 and therefore did not trigger the insuring agreements of any of the policies, all of which required that a claim be both first made and first reported during the policy period.

In the coverage litigation that followed, the court granted the insurer’s motion for summary judgment and concluded that none of the policies afforded coverage for the sellers’ claim.  The court rejected the insured’s argument that, because the policies did not provide for an extended reporting period upon renewal, the policies were ambiguous and must be construed as allowing the insured to report a claim to the insurer at any point during the period of continuous coverage.  The court held that coverage was unavailable because, even if the insured could establish that the extended reporting provisions were ambiguous, the insured would at most have been entitled to the benefit of the policies’ automatic 60-day extended reporting period pursuant to the Eleventh Circuit’s decision in Cast Steel Products, Inc. v. Admiral Insurance Co., 348 F.3d 1298 (11th Cir. 2003).  Since the insured waited nearly two years to notify the insurer of the sellers’ claim, this extended reporting period would not have been sufficient to preserve coverage.