Notice Of Claim

Arlington insurance lawyers will tell a client that a claim needs to be made to the insurance company as soon as the client knows of the claim. This is illustrated in a 1998, United States, Northern District of Texas case. The style of the opinion is, Chicago Insurance Company v. Western World Insurance Company. Here is some of the relevant information from that case.
Two residents of Avalon Place, a nursing home, were injured during their stay there. The residents left Avalon Place before May, 1995. They sued Avalon Place. Avalon Place gave notice to Chicago Insurance on September 7, 1995. Avalon Place did not notify Western World until May 8, 1996, eleven months later. The Chicago Insurance policy was an “occurrence” policy covering claims arising from occurrences during the period between June 28, 1995 and June 28, 1996. The Western World policy was a “claims made” policy that covered claims made against Avalon Place during the period from June 28, 1994 to June 28, 1995. This policy required Avalon to notify Western World “as soon as practicable” of any “occurrence” that could result in a claim and to notify Western World “as soon as practicable” of any claim made against it. Chicago Insurance and Western World settled the underlying claims and reserved their rights to litigate coverage between themselves. They each filed a declaratory judgment action seeking this Court to declare whether their policies covered liability incurred by a mutual insured and whether the parties were liable to one another for costs incurred in defending and settling that liability.
The Court ruled that Western World’s “claims made” policy does not cover the claims at issue because the insured did not give notice “as soon as practicable.” The Chicago Insurance policy does not cover the claims because they occurred before the effective date of the Chicago Insurance policy. Therefore, Western World has no right to seek reimbursement from Chicago Insurance, and Chicago Insurance has no right to seek reimbursement from Western World.
Avalon Place did not give Western World notice of the claims until May 8, 1996. This was at least eleven months after Avalon Place knew of the claims. This District Court noted that “there is ample Texas authority that taking eleven months to notify an insurance company is not ‘as soon as practicable.'”
The petitions in the underlying cases did not demonstrate that the claims were outside of Chicago Insurance’s policy. However, the dates of discharge indicate that the residents left Avalon Place on or before May 1995, before the effective date of the Chicago Insurance policy, June 28, 1995. Although Texas courts generally look only to the allegations of the plaintiff’s complaint and the terms of the policy to determine the duty to defend, “when the petition does not contain sufficient Facts to enable the Court to determine if coverage exists, it is proper to look at extrinsic evidence.” This District Court found that “the dates the residents were discharged are precisely the sort of extrinsic Facts that may be used to determine whether there is a duty to defend.”