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PL Coverage Lost Due to Late Notice

Tuesday, August 8, 2017   (0 Comments)
Posted by: Tom Jensen
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Insurance agent sold a policy to a homeowner per an application that answered "no" to whether the dwelling housed roommates or boarders, and to whether it had been converted to a multi-family structure. Fire loss followed. Investigation revealed the dwelling contained two separate dwelling units and four tenants. HO insurer paid $497,086.52 ACV on the loss, and sent a letter to the agent on July 9, 2012 explaining what happened and stating it would seek to hold agent liable for the damages due to violation of the producer agreement. The policy period was 2011 to 2012. On April 3, 2013 agent sent email to its claims-made PL insurer raising a "claims related question." On April 23, 2013 HO insurer sent an other letter to agent repeating its claim, and in October claim was filed. PL insurer filed dec action to avoid coverage and trial court granted it SJ. The ruling was affirmed in James River Ins. Co. v. Timcal, Inc., 2017 WL 2852812 (Ill. App. June 30, 2017). Evidence was undisputed notice was given on April 3, 2013, after the 2011-2012 policy period. The HO insurer's 2012 letter was unambiguously a claim. A specific demand for money is unnecessary to constitute a claim. Renewals do not extend the reporting period. To rule otherwise would create a long and unbargained-for "tail" of liability exposure.   

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