A mechanical engineering company cannot recover a pollution loss under its coverage because it filed its claim late, although it is alleged to have been told by its insurance claims department to hold on to the application until a formal request was made, a federal appeals court said Tuesday to confirm a lower court decision.
The Court of Appeal said that the bad advice allegedly given by the claims department could not be used to justify coverage because a claims policy was involved.
Tecumseh, Nebraska-based Topps Mechanical Inc. purchased a liability insurance policy from Richmond, Virginia-based Kinsale Insurance Co. excluding pollution incidents unless detected by TMI within seven days and reported to Kinsale within 45 days, according to the decision of the 8th U.S. Circuit Court of Appeals in St. Louis. Louis Topp & # 39 ;s Mechanical Inc. v. Kinsale Insurance Co.
During the coverage period, TMI was informed that an employee was suffering an injury from a pollution incident, and a representative of the company called Kinsale within seven days, and specifically asked if TMI would report it, according to the decision.
"An unidentified person in the Kinsale Injury Department told TMI that it could not yet report the incident as a claimant and said it should wait until the employee filed a formal request or lawsuit," according to the decision.
The verdict was upheld by a three-judge appeals court panel. it did not follow the usual language of the policy because the reported event in writing more than 45 days later, it said that the court should decide in its favor as it was told to withhold reporting of a claim until a formal request was made or a writ of summons was filed.
The appeals court panel said with an insurance policy that the notice of a claim is not just a part of the insured's duty to cooperate. It defines the limits of the insurer's obligation – if there is no notice in time, there is no coverage, "the panel said in citing a previous case.
The decision stated that TMI quoted to support its position involves event, not claims
Kinsale Attorney Sina Bahadoran, a partner of Clyde & Co. in Miami, said in a statement, "We appreciate the court's reasoned consideration of this nuanced issue."
TMI's lawyers did not respond to a request for comment.