Coverage Determined By Date Notice Is Received By Insurer, Not By Date It Is Sent

Applying Florida law, the United States Court of Appeals for the Eleventh Circuit held that notice under a claims-made-and-reported policy must be received by the insurer during the policy period, and not merely sent by the insured during the policy period.  Lake Buena Vista Vacation Resort L.C. v. Gotham Ins. Co., 2014 WL 7003820 (11th Cir. Dec. 19, 2014).

The insured performed escrow services for a client.  After money was stolen from the escrow account, the client brought suit against the insured.  The insured had a claims-made-and-reported E&O policy that required a claim to be reported to the insurer in writing.  Because the insured failed to make its monthly premium payment, the insurer cancelled the policy effective at 12:01 a.m. on October 4, 2007.  That same day, the insured sent notice of the suit to the insurer, which the insurer received on October 10, 2007.  The insurer denied coverage for the claim.

In the litigation that followed, the court rejected the argument that by mailing the notice before the policy period ended, the insured timely reported the claim to the insurer.  According to the court, to be effective, the notice of claim had to be received by the insurer during the policy period.   Therefore, because the insurer did not receive written notice of the claim from the insured until six days after the cancellation date, the policy did not afford coverage for the suit.