No Coverage Under Claims-Made Policy Where Insured Reported Alleged Injury, But No Claim Was Made, During the Policy Period

The United States Court of Appeals for the Fifth Circuit, applying Mississippi law, has held that a claims-made and reported policy does not provide coverage where the claimant did not assert a claim during the relevant policy period, notwithstanding that the insurer received copies of news articles related to the claimant’s injury and opened an internal “Claim/Occurrence” file during the policy period. Jordan v. Evanston Ins. Co., 23 F.4th 555 (5th Cir. Jan. 17, 2022).

A child suffered serious injuries when he ingested small magnets.  Several news outlets reported on his injuries in April 2012.  The manufacturer of the magnets sent the news articles to its liability insurers.  The manufacturer’s primary insurer acknowledged receipt of the notification and reserved all rights.  Its excess insurer opened a “Claim/Occurrence” file and noted that “[n]o claim or lawsuit” had been filed.  The injured child’s family sent a demand letter to the magnet manufacturer on December 11, 2012.  The magnet manufacturer sent the demand letter to its insurers who denied coverage on the grounds that there was no claim made during the applicable July 25, 2011 to July 25, 2012 policy period.

In their suit against the magnet manufacturer, the child’s family filed a complaint for declaratory judgment against the company’s insurers.  The trial court ultimately held that the insured had given effective notice of a claim during the policy period because the insurers treated it as such.  All insurers but one ultimately reached a settlement with the child’s family.  The remaining excess insurer appealed.

On appeal, the Fifth Circuit held that the child’s family failed to demonstrate that they made a claim against the magnet manufacturer during the policy period, and therefore the claims-made and reported policy does not provide coverage.  The court interpreted the undefined term “claim” as requiring “a ‘demand’ or ‘assertion’ made by a claimant against a party who could satisfy it.”  The court concluded that the news articles written and provided to the insurer during the policy period did not constitute a claim, and the insurer’s awareness of the child’s alleged injury was not sufficient to constitute a claim.  The court further determined that the fact that the manufacturer reported the news articles to its insurer, which opened a file and monitored further developments, does not negate the requirement that a claim actually be made during the policy period.