Reporting late provides no relief

Relief from forfeiture was unavailable for a claim reported late under a claims made and reported policy.

Insurance law – Commercial general liability insurance – Excess liability – Interpretation of policy – Relief against forfeiture – Duty to defend – Duties and liabilities of insurer – Agents and brokers – Failure to obtain reasonable coverage – Practice – Appeal – Summary judgments

Kestenberg Siegal Lipkus LLP v. Royal & Sun Alliance Insurance Co. of Canada, [2024] O.J. No. 3609, Ontario Court of Appeal, August 9, 2024, E.E. Gillese and J.M. Copeland JJ.A. and H.J. Wilton-Siegel J. (ad hoc).

A lawyer’s excess liability insurer denied coverage under a claims made and reported policy, on the basis that the claim was not reported during the policy period. Within a week of discovering the potential claim against the insured, the insureds asked their broker to report the claim to the insureds’ excess insurers. The broker reported the claim to one excess insurer but did not report to the second excess insurer until three years later, and more than two years after the second excess policy had expired. Four years after discovering the potential claim against the insureds, a lawsuit was commenced against the insureds. The second excess insurer denied coverage. The insureds commenced this action seeking a declaration of coverage, and an action against their broker for failing to report the claim.

The insureds’ claim was dismissed at summary trial. The insureds appealed on the basis that the summary trial judge erred in finding that relief from forfeiture was unavailable. The appeal was dismissed. Reporting the claim during the policy period is a condition precedent to coverage under a claims made and reported policy. Failure to report the claim during the policy period is non-compliance, and not imperfect compliance, making relief from forfeiture unavailable.

This case was digested by Joe Antifaev and edited by Steven W. Abramson of Harper Grey LLP and first published in the LexisNexis® Harper Grey Insurance Law Netletter and the Harper Grey Insurance Law Newsletter. If you would like to discuss this case further, please feel free to contact them directly at [email protected] or [email protected].