399_C069

NOTE – This is from our older court case archives. It may involve situations that are inapplicable to newer coverage forms. Please be aware of this possibility when reading and using this case.

Malpractice and Professional Liability Insurance	Negligence
Claims Made

Architects “Claims Made” Policy Limitations Are Enforced By Court

An Architects Professional Liability policy contained the following “claims made” terms relative to the period of coverage and notice of claims: “The insurance afforded by this policy applies to errors, omissions or negligent acts which occur on or after the date stated in item 6 of the declarations (the effective date of the first policy issued and continuously renewed by the company) provided that claim therefore is first made against the insured during this policy period and reported in writing to the company during this policy period or within 60 days after the expiration of this policy period.”

After performing architectural work for a school district, the insured was informed, during the period of coverage, of roof problems in a school building involved in the work. The district was not satisfied with corrective steps taken during the next four years and filed suit more than three years after the insured had cancelled the insurance. The insurer denied coverage and refused to defend the suit. The trial court granted summary judgment against the insurer and in favor of the architect. The insurance company appealed.

The insurer contended that the policy in question was a “claims made” policy, requiring claim against the insured to be made within the coverage period and reported to the insurer no later than 60 days after the policy expiration. The insurer stressed that the aggrieved party initiated its lawsuit and the insured forwarded the summons and complaint to the insurer more than three years after the expiration of the policy. It claimed that it was under no obligation to defend or pay a judgment because of the policy terms.

The court found it clear that the school district’s complaint did not allege a situation that would be potentially covered by the insurance. There was no coverage for alleged omissions or negligent acts attributed to the coverage period because they were not presented prior to the policy expiration or within the 60 days following. Accordingly, the judgment of the trail court was reversed with instructions to the trial court to deny the insured’s motion for summary judgment against the insurer.

Graman, Plaintiff, Appellee v. Continental Casualty Company, Defendant, Appellant. Illinois Appellate Court, Fifth District. No. 79-417. Filed August 20, 1980. CCH 1980 Fire and Casualty Cases 317.