No Coverage for Related Claims Reported After Policy Period During Which Claim Was First Made

The U.S. District Court for the Southern District of New York, applying New York law, has held that no coverage is available for related claims reported to the insurer after the end of the policy period in which the first claim was made.  Berkley Assurance Co. v. Hunt Constr. Group, Inc., 2020 WL 3000399 (S.D.N.Y. June 4, 2020).

The insured sought coverage for two claims under claims-made-and-reported policies for the policy periods of June 15, 2016 to July 15, 2017 (the “2016 Policy Period”) and July 15, 2017 to June 15, 2018 (the “2017 Policy Period”).  The first claim (Claim 1) was made during the 2016 Policy Period, but the insured did not report the claim to the insurer until five days after that policy period ended.  The second claim (“Claim 2”) was made and reported to the insurer during the 2017 Policy Period.  The insurer denied coverage for Claim 1 based on a contract liability exclusion, but initially agreed to defend Claim 2 before denying coverage and filing a declaratory judgment action.

The court granted summary judgment to the insurer, holding that coverage was unavailable for both claims.  The court concluded that, because the insured failed to report Claim 1 to the insurer within the 2016 Policy Period as required by that policy, no coverage was available.  The court rejected the insured’s argument that notice of Claim 1 was timely because the insured reported the claim within the “automatic extended reporting period.”  Neither the insurer nor the insured terminated or non-renewed the policy, so the extended reporting period was not triggered.  The court also held that the insurer did not waive, and was not estopped from asserting, a late notice defense even though the insurer cited only the contract liability exclusion when it first denied coverage for Claim 1.  The court further concluded that because Claim 2 was related to Claim 1, and therefore deemed a single claim first made when Claim 1 was made, no coverage was available for Claim 2 given the insured’s failure to timely report Claim 1.  The court rejected the insured’s argument that, based on this reasoning, it would have been required to report Claim 2 during the 2016 Policy Period “before it was even made,” explaining that the insured’s obligation to report Claim 2 “would have been satisfied had it timely reported [Claim 1].”