Molyneaux Insurance
  • The Molyneaux Way
    • Trumps and Tricks Euchre Event
    • ClearPath™
    • Our Team
    • Privacy Policy
  • Business
    • Employee Benefits >
      • Education and Compliance
      • Share to Compare
    • Risk Management
    • Claims Management
  • Industries
    • Franchises and Associations
  • Personal
  • Contact Us
  • Careers
    • Open Positions
  • Blog
  • The Molyneaux Way
    • Trumps and Tricks Euchre Event
    • ClearPath™
    • Our Team
    • Privacy Policy
  • Business
    • Employee Benefits >
      • Education and Compliance
      • Share to Compare
    • Risk Management
    • Claims Management
  • Industries
    • Franchises and Associations
  • Personal
  • Contact Us
  • Careers
    • Open Positions
  • Blog

​Molyneaux ​Blog

A lesson in timely claims reporting

9/18/2019

 
Timely Claims Reporting
​A recent appeals decision denied coverage to a company on its directors and officers (D&O) liability insurance policies for taking too long to file the claim.
​
In this case, the 5th U.S. Circuit Court of Appeals in New Orleans sided with an insurer that had denied a claim a company had made after being sued for failing to pay overtime wages to nonexempt employees.

The insurance company had denied the claim because the first employee's claim was made in August 2014, but the company failed to inform the insurer of that and subsequent claims until September 2015.

This case illustrates the importance of filing claims in a timely manner.

When the employer finally did file the claim it had an in-force D&O policy with the insurer, although there was an earlier policy in force when it had received the first claim of failing to pay overtime.

Under the policy in force at the time of the first claim, the insurer would have been obligated to pay all claims made against the company under the policy.

"That earlier policy would have provided coverage except that the insured failed to comply in 2014 with a notice provision. We conclude the district court was correct to rely on this difference," the three-judge panel in the appellate court wrote in an opinion that upheld a lower court's ruling.

One of the critical obligations of an insured is the duty to timely report claims or circumstances that may give rise to a claim. Failure to report a claim per the policy requirements can result in a claim being denied, or worse, having the entire policy voided.

D&O policies are "claims made" policies, meaning that coverage exists only for claims made during the period the policy is in effect. Claims made while no policy or extended reporting period are in effect are not covered.

Claims-made policies also have retroactive dates. Ideally, the retroactive date is the day the insured started a business, but it can also be the day that it first purchased professional liability coverage.

Assuming the retroactive date has not been advanced, the policy in force when a claim is made is the policy that will respond, regardless of when the negligent act, error, or omission took place.

However, there is one crucial qualifier. This insurance applies to claims that took place after the retroactive date, but before the end of the policy period, provided the insured did not know about the claims before the effective date shown in the declarations.

In other words, if you knew of a claim prior to the time you renewed your claims-made policy but did not report it, and if a claim is subsequently made, the insurance company can deny coverage. It doesn't matter whether or not it's been continuously renewed by one insurance company; the policy excludes it.
​
This underscores the importance of timely reporting of all claims before renewal each year.

Comments are closed.

    Categories

    All
    COVID 19
    Cyber Security
    Directors And Officers
    Employee Benefits
    News
    Personal Insurance
    Property And Casualty
    Risk Management
    Trumps & Tricks
    Wellness
    Workers Compensation

    Archives

    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    November 2017
    September 2017

Company

About Us
Our Team
​Trumps & Tricks
Testimonials
Careers
​News
Privacy Policy

Services

​Commercial Insurance
Risk Management
Employee Benefits
Group Health Insurance

Retirement Benefits
​Personal Insurance

Industry Specialization

Contact Molyneaux

​​5025 Utica Ridge Road
Suite 100
Davenport, IA 52807
​101 East Main Street
​
Suite 202
Galesburg, IL 61401
Phone: 563-324-1011 
Toll Free: 800-713-6930

Partner Agencies

LMC Insurance & Risk Management Logo
Independent Insurance Services Logo
Molyneaux Logo
The Friedman Group Logo
© COPYRIGHT 2020 Molyneaux Insurance