Court Requires Insurer Show Prejudice for Coverage Denial Where Notice of Claim Given After Reporting Window but Within Policy Period

The United States District Court for the Eastern District of Oklahoma, applying Oklahoma law, granted an insured’s motion for summary judgment, finding that a claim was sufficiently made and reported during the policy period. Gen. Star Indem. Co. v. Guthrie., 2022 WL 4088066 (E.D. Okla. Sept. 2, 2022). The court ruled that the insurer would be required to show prejudice to decline coverage on late reporting outside of the policy’s ten-day reporting window because the claim was noticed within the policy period. The court also ruled that notice to the broker constituted effective notice to the insurer because of the specific language addressing notice in the policy.

A physician purchased a claims-made-and-reported professional liability insurance policy for the policy period of May 20, 2018 through May 20, 2019. The policy afforded coverage only if “[s]uch claim or potential claim is reported to us in writing within ten (10) days of receipt by the named insured of a written notice of claim.” The physician treated a patient who later died. The administrator of her estate brought a malpractice action against the physician on April 27, 2019. The physician notified his insurance agent of the malpractice action on May 13, 2019 (more than 10 days after the claim was made but within the policy period). The agent then notified the insurer on June 6, 2019 (more than ten days after the claim was made and outside the policy period). The insurer denied coverage on the basis of late notice and filed a declaratory judgment action. The parties cross-moved for summary judgment as to whether the claim was properly noticed.

The court granted the insured physician’s motion in relevant part. The court first found that the policy was ambiguous as to the form notice could take. While the policy’s notice provision stated that notice must be provided to the insurer in writing, the first page of the policy included a header stating, “WHAT TO DO IN CASE OF A CLAIM” which stated that the insured should report the claim “to either your agent/broker or to [the insurer].” The court thus held that the physician’s May 13, 2019 report to his insurance agent sufficed as the operative notice. The court then held that the “notice-prejudice” rule should apply because, although notice was given more than ten days after the claim was made, it was still given within the policy period. The court noted that while an insurer ordinarily need not show prejudice for a claim that is not timely reported under a claims-made-and-reported policy, it would need to show prejudice here because the claim was reported during the policy period.