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Massachusetts Courtroom Confirms No Prejudice Required to Deny Protection for Late Discover below Claims-Made Coverage – JD Supra

The Appeals Courtroom of Massachusetts has affirmed judgment in favor of an insurer below a claims-made coverage on the premise that the declare was not well timed reported. See Meadows Constr. Co. LLC v. Westchester Hearth Ins. Co., 2022 WL 151579 (Mass. App. Ct. Jan. 18, 2022). The appellate court docket held that the discover requirement in a claims-made coverage is “of the essence” in figuring out whether or not protection exists, and an insurer needn’t present it was prejudiced by late discover of a declare so as to deny protection on the premise of an insured’s premature reporting of a declare.
An insured sought protection below a claims-made coverage for a wage and hour class motion grievance filed after the expiration of the coverage. The insured didn’t dispute that the declare was made after the coverage’s expiration however argued that it was entitled to protection based mostly on the coverage’s discover of circumstance provision, which acknowledged, “[i]f, in the course of the Coverage Interval . . . any of the Insureds first turns into conscious of info or circumstances which can moderately give rise to a future Declare . . . and if the insureds, in the course of the Coverage Interval . . . give written discover to the insurer as quickly as practicable . . . then any Declare made subsequently arising out of such Wrongful Act shall be deemed . . . to have been made on the time such written discover was obtained by the insurer.”
The insured argued that it didn’t change into conscious of info or circumstances which may moderately give rise to the claims asserted within the wage and hour class motion grievance till it was served with the grievance after the coverage interval had expired and thus its discover shortly thereafter was well timed. The court docket famous that a lot of the events’ briefing centered on whether or not occasions that passed off in the course of the coverage interval had been ample to place the insured on discover of a possible future declare. Nevertheless, the court docket held that it needn’t determine that problem as a result of the insured by no means offered written discover of the circumstances in the course of the coverage interval and thus couldn’t discover “secure harbor” within the provision.
The insured additionally argued that the insurer couldn’t deny protection based mostly on premature discover of the declare until it may reveal prejudice, counting on Chas. T. Major, Inc. v. Fireman’s Fund Ins. Co., 406 Mass. 862 (1990). The court docket held that the insured “misinterpret” Chas T. Major wherein the Massachusetts Supreme Judicial Courtroom held that an insurer needn’t present prejudice below a claims-made coverage. The court docket agreed with the Supreme Courtroom’s reasoning that such a requirement would “defeat the elemental idea on which claims-made insurance policies are premised.”
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