Crum & Forster prevails in claims-made policy period dispute

A federal appeals court has upheld Crum & Forster Specialty Insurance Co. Inc.’s denial of an insurance claim for a claims-made policy by a construction firm because the claim was not submitted within the policy period, even though it was submitted during the policy’s subsequent renewal period.

Morristown, New Jersey-based Crum & Forster issued a professional errors and omissions liability claims-made policy to Anchorage-based Alaska Interstate Construction L.L.C. with an initial policy period of Dec. 1, 2011, to May 1, 2013, and then a renewal policy with a policy period of May 1, 2013, to May 1, 2014, according to Tuesday’s ruling by the 9th U.S. Circuit Court of Appeals in San Francisco in Alaska Interstate Construction L.L.C. v. Crum & Forster Specialty Insurance Co. Inc.

A claim against the policy was made by a wine producer on Jan. 10, 2013, during the initial policy period.  But Alaska Interstate did not report the claim until June 19, 2013, during the renewal policy period, according to the ruling.

After Crum & Forster denied coverage, Alaska Interstate filed suit in U.S. District Court in Anchorage, which granted the insurer summary judgment.

A three-judge appeals court panel unanimously upheld the lower court. Alaska Interstate argues “‘policy period’ can reasonably be interpreted as encompassing both the initial and renewal policy periods,” said the ruling.  “Under this interpretation, (Alaska Interstate) would have made and reported the claim within the single continuous policy period.”

But this proposed interpretation of “policy period” is not reasonable, said the ruling.  “According to the plain language of the policies, a claim must be made and reported within a single policy period, as stated in the Declarations for a given policy,” it said.

 “An insured cannot reasonably expect coverage under such circumstances,” the ruling said, in upholding the lower court.