A federal appeals court on Thursday affirmed a lower court ruling in favor of a Hiscox Ltd. unit, holding that an insured had submitted the claim on a claims-made policy outside the policy period, in litigation involving a failed real estate transaction.
After Thornton, Colorado-based Banjosa Hospitality LLC‘s attempt to buy a Montana motel fell through, the company obtained a $600,000 judgment against the real estate broker involved in the transaction, according to court papers in Banjosa Hospitality LLC vs. Hiscox Inc.
The broker, who had a claims-made, professional liability policy with Hiscox, assigned his rights under the policy to Banjosa, but the insurer denied coverage on the basis the claim was submitted outside the policy period.
Banjosa filed suit against Hiscox in U.S. District Court in Billings, Montana, which ruled in Hiscox’s favor. The ruling was affirmed by a unanimous three-judge appeals court panel of the 9th U.S. Circuit Court of Appeals in San Francisco.
“The insured reported the claim to Hiscox in May 2014, but the reporting condition clearly required reporting no later than January 2014; accordingly, the insured reported the claim too late,” said the ruling, in holding the policy “clearly excludes coverage.”
Hiscox attorney Robert J. Phillips, a partner with Garlington Lohn & Robinson PLLP in Missoula, Montana, said in a statement, “We are pleased that the Appellate court held that the notice-prejudice rule does not apply to claims-made policies.” Banjosa’s attorney had no comment.
In July, a Chubb Ltd. unit prevailed in a coverage dispute with an Arkansas school district based on the timing of the claim submitted under its claims-made, employment practices liability policies.
