Saturday, August 1, 2009

Court of Appeals holds that insurers who issued claims-made policies are not required to show prejudice as a result of late notice of claim

This is my last post on Gargano v. Liberty Int'l Underwriters, Inc., in which the United States Court of Appeals held that insurers could under claims-made policies claims that were not both made and reported during the policy period.

The plaintiff argued that the insurers must demonstrate prejudice from his untimely notice in order to escape their coverage obligations. Although with occurrence based policies it is the rule in Massachusetts that an insurer must show prejudice from late notice, the court held that the same is not true of claims-made policies. To do so "would defeat the fundamental concept on which claims-made polices are premised."

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