Section 9.24 Was There a “Claim” During the Policy Period?

• Library: Insurance Practice 2015

Under a claims-made policy, coverage exists only when there is a “claim” during the policy period or, if purchased, during the extended coverage period. Most policies provide that, if during the policy period the insured provides notice of an occurrence that gives rise to a post-period claim, the claim is covered. When this is the case, the “claim” relates back to the policy period in which notice was given. Helfand v. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa., 13 Cal. Rptr. 2d 295, 307–08 (Cal. Ct. App. 1992).

While the typical policy defines such other coverage-delimiting terms as “loss” and “wrongful act,” for many years the meaning of “claim” was almost never expressly set out in the policies of the major carriers. Although some policies are now defining the term, the majority of litigation still involves policies that were in effect before the incorporation of those definitions into the policy. Without explicit guidance from the contract, discerning the nature, proper definition, and scope of a claim has necessarily been the subject of considerable litigation.

In the course of an extensive analysis of what constitutes a claim, the Fifth Circuit, in FDIC v. Mijalis, 15 F.3d 1314 (5^th Cir. 1994), made it clear that this is a fact-specific inquiry that can only be decided on a case-by-case basis. Examining the underlying relationship between the presence of a claim and the existence of coverage for losses resulting from that claim, the court reasoned that the term “claim” must be closely related to a legal obligation of an insured director or officer to pay money to the claimant. Id. at 1332.

The most common broad definition of a “claim” is a demand for something as a right. See, e.g., Nat’l Cas. Co. v. Great Southwest Fire Ins. Co., 833 P.2d 741, 744 (Colo. 1992); Bensalem Township v. W. World Ins. Co., 609 F. Supp. 1343, 1349 n.8 (E.D. Pa. 1985). The purported claim must be more than a request for an explanation...