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The crucial difference between "event" and "claim for" liability insurance



Notifications and reported general liability policies differ from general liability policies because the reporting requirement defines the limits of the insurer's obligation – if there is no notice in time, there is no coverage. No excuses are allowed. No argument available that the insurer was not affected by the late report will be honored.

Topp & # 39 ;s Mechanical, Inc., and Nebraska Corporation v. Kinsale Insurance Company, and Arkansas Insurance Corporation, No. 19-1991, United States Court of Appeals for the Eighth Circuit (August 4, 2020) Topp & # 39 ;s Mechanical, Inc. (TMI) purchased a liability insurance policy from Kinsale Insurance Company. The policy excludes a "pollution incident" unless TMI reports correctly. Following a pollution incident, Kinsale declined coverage. TMI sued for policy violations. The district court granted Kinsale's proposal for dismissal.

FACTS

TMI sued Kinsale for violating the policy, a tort policy. The policy had an "exclusion ̵

1; absolute pollution and pollution-related responsibility." This exclusion of contamination excludes coverage for "damage or damage that occurs directly or indirectly as a result of, related to, or in any way involving" contamination incidents. An exception to the exclusion of pollutants – "Time element pollution subsidy" – "change coverage according to the policy" if a pollution event was: (1) "discovery of [TMI] within [7 days]" and (2) "reported to [Kinsale] in writing within [45 days].

During the coverage period, TMI was informed that an employee was injured in a pollution accident. Within seven days, a TMI representative called Kinsale about the incident and specifically asked if TMI would report it. An unidentified person in the Kinsale Injury Department told TMI that it could not yet report the incident as a claim and said it should wait until the employee filed a formal request or lawsuit.

Almost 18 months later, the injured employee made a formal request. TMI forwarded it to Kinsale and claimed damages. Six weeks later, Kinsale declined coverage. TMI sued Kinsale for breach of contract. After Kinsale removed the case from the state court, the district court granted its decision to dismiss.

ANALYSIS

TMI acknowledges that it did not follow the language of the contract because it reported the incident "in writing" more than 45 days later. Instead, it invokes exceptions and estoppel because Kinsale told it to include reporting a claim until a formal request was made or a lawsuit was filed.

There is a "crucial difference" between "occurrence" and "claim on" liability insurance. Both types of insurance require the insured to immediately notify the insurer of any covered losses. However, with an insurance policy, this notice is not only 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. According to an insurance policy, “the actual description of the covered risk includes the requirement that receivables are both made and reported within the insurance period. [ Esmailzadeh v . Speakman 869 F.2d 422, 425 (8th Cir. 1989)].

TMI and Kinsale agreed on a claimed policy. It excludes pollution incidents. But it "changes coverage" according to Time Element Pollution Endorsement, for incidents that are detected within seven days and reported within 45 days in writing.

Applying what it thought would be the Nebraska Act, the Eighth Circle noted that the Nebraska Supreme Court states that "Waiver and estoppel are not available to extend the coverage of an insurance policy to protect the insured against risks not included in them or expressly excluded therefrom. "[ Design Data Corp . v . Maryland Cas . Co ., 503 NW2d 552, 559 (Neb

Estoppel cannot be invoked to extend insurance coverage or the scope of an insurance contract, therefore TMI cannot invoke exemptions and estoppel to broaden – or as the policy says, "modify" coverage.

Waiver and estoppel does not apply in a claim made.Insurance and estoppel can not strengthen the risks covered by an insurance and can not be used to create a new and different agreement with respect to the covered risk and the insurance is extended. In addition to what is required for an event-based general liability policy is to limit the exposure that the insurer faces. It provides a quick report – 45 days in this case – within the actual policy dates as a condition of coverage. Although TMI was able to prove that a representative of Kinsale wrongly told them not to report the claim, the fact did not change the material condition of the policy. The action of the alleged employee of Kinsale did not change and could not change the policy to increase the coverage written in the ordinary language of the police. No insured by an insurance policy should not report a known loss in writing, even if an unknown person on the phone tells them not to report.


© 2020 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to working as an insurance consultant specializing in insurance coverage, handling insurance claims, bad faith insurance and near-insurance fraud. insurers and policyholders. He also acts as an arbitrator or mediator for insurance-related disputes. He practiced law in California for more than 44 years as an insurance coverage and attorney handling attorney and more than 52 years in the insurance industry. He is available at http://www.zalma.com and zalma@zalma.com.

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