Delay In Reporting A Claim

Insurance policies are of two types of it relates to the coverage of a claim. One is called an “occurrence” policy.  An occurrence policy covers losses that occur during the policy period.  The other type of coverage is a “claims made” policy.  A claims made policy covers claims that are made only while the policy is effective irregardless of when the event/claim actually occurred.

This distinction was discussed in 2019, Amarillo Court of Appeals opinion styled, In Re Landmark American Insurance Company.  This is a mandamus case.

Landmark, the insurer, petitioned the appeals courts seeking an Order for the Judge in the underlying case to vacate his Order allowing a deposition of a Landmark representative.  This appeals courts conditionally granted the writ.

The insurance policy in the case was a “claims made” policy and the policy period was May 8, 2015, to May 8, 2016.  The Policy required that any claims be made no later than 60 days after the end of the Policy Period.  The claim was timely forwarded to the agency who sold the policy but the agency did not timely forward the claim to Landmark.  As a result, Landmark denied coverage due to the late notice.  A lawsuit resulted.

The insured sought to compel the deposition of a Landmark representative.  Landmark argued that the sole purpose of the deposition was to discover whether or not Landmark had been prejudiced by the late notice.  Landmark countered, arguing that prejudice was not the issue.  The issue was whether the notice was timely or not and thus, the deposition of the Landmark representative on that issue was irrelevant.

In this case, the Court stated that no one disputes that the policy at issue is a claims made policy, as opposed to an occurrence policy and explained that a claims-made policy only covers those claims first asserted against the insured during the policy period and provides unlimited retroactive coverage without prospective coverage while an occurrence policy covers only claims arising out of occurrences happening within the policy period regardless of when the claim is made and provides unlimited prospective coverage without retroactive coverage. Similarly undisputed is that Landmark was not notified of the contractor’s claim against Labs until after expiration of both the policy term and the 60 day grace period.  Under these circumstances, whether Landmark suffered prejudice due to the delay in notice is irrelevant.

Next, a party will not have an adequate remedy by appeal when a discovery order compels the irrelevant information.  As a result, the mandamus was conditionally granted.

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