No Coverage Available for Lawsuit Served on Insured after End of Extended Reporting Period

The Philadelphia County Court of Common Pleas, applying Pennsylvania law, has granted summary judgment in favor of an insurer, holding that coverage under a claims-made-and-reported policy is unavailable where an insured is not served with the lawsuit during the policy period or extended reporting period.  Wolf v. Liberty Ins. Underwriters, Inc., 2016 Phila. Ct. Com. Pl. LEXIS 359 (Phila. Ct. Com. Pl. Oct. 11, 2016).

The insured, an attorney, was sued for malpractice.  The complaint was filed on December 22, 2014, but was not served on the insured until February 27, 2015.  The insured sought coverage under his lawyer’s professional liability policy, which expired on December 1, 2014 and included an automatic 60-day extended reporting period that ran through January 30, 2015.  The insurer denied coverage for the malpractice suit because, while the lawsuit was filed during the policy’s extended reporting period, the insured did not receive service of the lawsuit – and therefore the claim was not first made – until after the extended reporting period had expired.  The insured filed a suit against the insurer seeking coverage, and the parties filed cross-motions for summary judgment.

The court granted the insurer’s motion for summary judgment and denied the insured’s motion, finding that coverage was unavailable for the lawsuit.  The court determined that under the terms of the policy, which defined “claim” as “a demand received by [the insured],” the lawsuit did not become a “claim” until the insured received service of the writ of summons.  The court noted that the insured probably would have received service during the extended reporting period had it been served correctly, but the claimant had erroneously attempted service at the insured’s former address.  However, the court stated that it could not “ignore the clear language of the Policy, nor circumvent the stipulated fact that [the insured] received a re-issued writ of summons beyond the Automatic Extended Reporting Period.”