Notice-of-Circumstances Provisions in Claims-Made Policies
Some Considerations for Liability Insurers of Financial Institutions in the Subprime Claims Environment
Coverage
7/2008
Victor F. Mustelier
As insurers under bankers', D&O, and other liability policies respond to the wave of claims likely to result from the subprime mortgage crisis, they may wish to consider whether their policyholders are complying with provisions commonly found in such policies dealing with notice of potential claims and the submission of claims outside of the current policy period. This easily overlooked issue can have real consequences for an insurer as regards the scope of its coverage obligations and exposure of its limits. In rulings in favor of insurers in coverage litigation, the courts have found that policyholders who fail to comply with these "notice-of-circumstances" clauses fail to establish their right to coverage.
In this article, published in the July/August 2008 edition ofCoverage, Mintz Levin attorney Victor F. Mustelier discusses relevant case law and background to demonstrate the strong need for insurers to insist on strict compliance by policy holders with notice-of-circumstances provisions in claims-made policies.
