HOW TO KNOW WHAT YOU DON’T KNOW

SAFEGUARDING COVERAGE LIMITATIONS BASED ON THE INSURED’S PRIOR

KNOWLEDGE OF POTENTIAL CLAIMS

Presenters*

• Bob Clark - Senior Counsel for Travelers

• Lee Siegel - Assistant Vice President for The Hartford 

• Kevin O’Hagan - Partner, O’Hagan, LLC

• Philip Savrin – Partner, Freeman Mathis & Gary, LLP

*DISCLAIMER: The views and opinions expressed by the panelists are solely their own and do not necessarily reflect the views and opinions of their respective employers.

Claims-made versus occurrence policies– Claims-made typically covers claims first made

against the insured during the policy period, unless an insured knew facts that could reasonably give rise to a claim

– Occurrence (CGL) typically covers bodily injury or property damage during the policy period or resulting from a personal and advertising injury offense committed during the policy period

– Continuation or resumption can be “deemed” to have occurred before policy period

Reservation of Rights

• Importance - absence can waive coverage defenses• Should assert potential breach of policy conditions such

as notice• Contents - allegations and policy provisions at issue• Pointers

– send early and often– communication is key – supplement at key points– avoid surprises on coverage issues

• Consider declaratory judgment/rescission, if appropriate

Scenario 1• David Driver is injured and consults Larry Lawyer • Lawyer advises Driver he will evaluate the claim• Lawyer did not know the limitations period was

expiring• Lawyer applies for claims-made coverage from ABC

Insurance Company stating that he has no knowledge of circumstances that could give rise to a claim

• After the policy is issued, Driver demands compensation because the limitations period expired

Scenario 2• Connie Contractor, Inc. builds 20 residences in two phases• A city inspector observes leaks in two of the Phase I homes

and brings it to the attention of a subcontractor• The subcontractor re-seals the windows and sends the invoice

to Contractor, Inc.’s billing clerk who pays the amount • Contractor begins Phase II and switches to ABC Insurance

Company• More leaks are observed around the Phase I homes at which

point Contractor, Inc. notifies ABC Insurance Company • ABC finds that the windows in both Phase I and Phase II

residences were installed improperly, causing water intrusion that damaged personal property of the residents

Scenario 3• Veronica Victim works for Manly Man Company for many years. • She informs the risk manager that Callous Cowboy has been

harassing her• She has an anxiety disorder but also needs the job• Cowboy says his behavior is innocent flirtation but will stop• Victim is laid off due to a shortage of work but she claims it is

retaliation• After Victim is laid off but before her claim, Manly Man changes

coverage to ABC Insurance Company

Concluding remarks…