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April 20, 2017

Louisiana Court Enforces Reporting Requirement in Claims-Made Policy


Louisiana Court Enforces Reporting Requirement in Claims-Made Policy

In its recent decision in XL Specialty Insurance Company v. Bollinger Shipyards, Inc., 2015 U.S. Dist. LEXIS 23633 (E.D. La. Feb. 26, 2015), the United States District Court for the Eastern District of Louisiana had occasion to consider the effect of an insured’s untimely reporting of a claim under claims-made and reported policies.

Bollinger was insured under several D&O policies issued by AIG companies, including one for the period December 31, 2005 to December 31, 2006 and another for the period May 1, 2008 to May 1, 2009. While the 05-06 policy was in effect, Bollinger received a “preserve evidence” letter from the United States in connection with a qui tam investigation. While the 08-09 policy was in effect, Bollinger entered into a tolling agreement with the United States. Bollinger did not give specific notice of either event to AIG until July 2011. While the parties disputed whether the preserve evidence letter constituted a claim for the purposes of the 05-06 policy, AIG and Bollinger both agreed that the tolling agreement constituted a “claim” as that term was defined by the 08-09 policy. AIG maintained, however, that Bollinger’s failure to report the tolling agreement until over two years after the expiration of the 08-09 policy was fatal to its right to coverage.

Looking to Louisiana case law on the issue, in particular the recent decision in Gorman v. City of Opelousas, 148 So. 3d 888 (La. 2014), the court sided with AIG, agreeing that the reporting requirement in a claims-made and reported policy defines the scope of coverage and thus must be strictly enforced. In challenging this outcome, Bollinger pointed out that it had continuously renewed its D&O coverage with AIG, both during the period from 2006 through 2008 and after the expiration of the 08-09 policy. Bollinger contended, therefore, that the policies should be collectively considered a single “merged” policy allowing claims made in one particular policy period to be reported at any time during the successive renewals. Citing to the Gorman decision, the court rejected this contention, concluding that each policy must be considered separately and that the policy renewals “did not alter the defined policy periods of the individual policies.”

– See more at: http://www.traublieberman.com/insurance-law/2015/0303/6058/#sthash.fK9z0MHh.dpuf

In its recent decision in XL Specialty Insurance Company v. Bollinger Shipyards, Inc., 2015 U.S. Dist. LEXIS 23633 (E.D. La. Feb. 26, 2015), the United States District Court for the Eastern District of Louisiana had occasion to consider the effect of an insured’s untimely reporting of a claim under claims-made and reported policies.

Bollinger was insured under several D&O policies issued by AIG companies, including one for the period December 31, 2005 to December 31, 2006 and another for the period May 1, 2008 to May 1, 2009. While the 05-06 policy was in effect, Bollinger received a “preserve evidence” letter from the United States in connection with a qui tam investigation. While the 08-09 policy was in effect, Bollinger entered into a tolling agreement with the United States. Bollinger did not give specific notice of either event to AIG until July 2011. While the parties disputed whether the preserve evidence letter constituted a claim for the purposes of the 05-06 policy, AIG and Bollinger both agreed that the tolling agreement constituted a “claim” as that term was defined by the 08-09 policy. AIG maintained, however, that Bollinger’s failure to report the tolling agreement until over two years after the expiration of the 08-09 policy was fatal to its right to coverage.

Looking to Louisiana case law on the issue, in particular the recent decision in Gorman v. City of Opelousas, 148 So. 3d 888 (La. 2014), the court sided with AIG, agreeing that the reporting requirement in a claims-made and reported policy defines the scope of coverage and thus must be strictly enforced. In challenging this outcome, Bollinger pointed out that it had continuously renewed its D&O coverage with AIG, both during the period from 2006 through 2008 and after the expiration of the 08-09 policy. Bollinger contended, therefore, that the policies should be collectively considered a single “merged” policy allowing claims made in one particular policy period to be reported at any time during the successive renewals. Citing to the Gorman decision, the court rejected this contention, concluding that each policy must be considered separately and that the policy renewals “did not alter the defined policy periods of the individual policies.”

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