Insurance Attorney Can Help Determine When The Policy Ends

Weatherford lawyers and those in Mineral Wells, Aledo, Azle, Brock, Willow Park, Graford, Millsap and other places in Parker County need to know about this insurance case and the exception that often can apply.
The style of the case is, Ulico Casualty Company v. Allied Pilots Association. This is a Texas Supreme Court case and the opinion was issued in 2008.
Here is some background:
Ulico Casualty Company issued a claims-made liability policy to the Allied Pilots Association (APA). The policy specified that it was effective from August 25, 1998 through August 25, 1999 and provided coverage, as relevant to this matter, for:
“all Loss which such Insured shall become legally obligated to pay on account of any claim made against the Insured during the Policy Period or, if exercised, during the Extended Reporting Period, for a Wrongful Act committed, attempted, or allegedly committed or attempted by such Insured before or during the Policy Period, and reported to [Ulico] … during the Policy Period or the Extended Reporting Period, if elected.”
The policy defined ” loss” to include defense costs. The policy required that, as a condition precedent to APA’s rights under the policy, APA ” give to [Ulico] written notice during the Policy Period or the Extended Reporting Period, if elected, of any claim made against [APA] for a Wrongful Act.” The policy provided that if Ulico cancelled or refused to renew it, APA could have an extended period of twelve months beyond the policy expiration date in which to report claims made against it-an Extended Reporting Period (ERP)-based on acts committed by APA within the policy period, provided APA paid an additional premium of fifty percent of the annual premium. The ERP section also provided that if APA terminated the policy or declined to renew, then Ulico could, ” [i]f requested, at its sole discretion, grant an Extended Reporting Period.”
APA paid premiums for and Ulico issued two written endorsements, each amending the policy and providing for an extension of the Policy Period. The endorsements first changed the policy period from August 25, 1998 to September 25, 1999, and then to October 25, 1999. On October 4, 1999, twenty-one days before the amended policy period expired, APA was served with a suit styled Allen v. American Airlines, Inc. APA forwarded the Allen suit papers to its insurance broker and to the law firm of James & Hoffman, its regular outside litigation counsel. James & Hoffman undertook defense of APA. Ulico was not notified of the suit until APA’s agent forwarded notice of suit on November 5, 1999.
In December 1999, Ulico’s claims analyst, Sheila Bowers, informed APA by letter that the claim was being reviewed and that APA would be notified of Ulico’s coverage decision. Referencing the Ulico policy, she advised APA that no defense fees, costs, charges, or expenses may be incurred or settlements made without Ulico’s prior written consent. In March 2000, Bowers sent APA’s counsel a letter stating that the policy provided for defense costs, but Ulico was expressly reserving all its rights to deny coverage. She enclosed litigation management forms, attorney evaluation forms, and a form for the attorney’s time forecast. James & Hoffman did not respond to Bowers’s letter. In April 2001, Bowers wrote the law firm another letter which stated that pursuant to the reservation of rights letter of March 1, 2000, ” Ulico has agreed to reimburse [APA] for reasonable and necessary defense expenses.” In May 2001, the firm responded and enclosed its billings of approximately $635,000 for defending APA in the suit. At that point, the law firm had defended the suit and filed a motion for summary judgment on behalf of APA without any reports to or further contact with Ulico. Neither APA nor its defense firm had sought Ulico’s approval for any actions or for authorization to incur expenses in defense of the lawsuit. The trial court granted summary judgment in APA’s favor in September, and an appeal by the Allen plaintiffs was dismissed.
Ulico filed suit in November 2001 seeking a declaratory judgment that it did not have coverage and did not owe APA’s defense costs. The trial court entered judgment in favor of APA on the waiver and estoppel findings for $616,468.55.
This court agreed with Ulico. The policy expressly required written notice of a claim, which is what APA provided. The written notice of a claim did not request a period of time for an ERP or specify that an ERP was being requested. The policy required a request for an ERP under these circumstances. Ulico’s written responses did not grant any period beyond the policy period during which a claim could be reported and still comply with coverage requirements.
There followed in this case, all long discussion of the applicable laws and other cases.
This court said that APA correctly notes that the applicable language of the EXTENDED REPORTING PERIOD section does not require a written request from the insured. But that language cannot be read separately and in isolation from the GENERAL CONDITIONS requirement that no change or modification of the policy shall be effective except when made by written endorsement signed by an authorized representative of the company. The EXTENDED REPORTING PERIOD language specified the process by which an ERP could be requested by an insured or granted by Ulico, but the GENERAL CONDITIONS specified when an ERP would be effective: when made by written endorsement signed by an authorized representative of the company. This court agreed with the trial court that no evidence supports the finding that APA’s claim was made during a period for which Ulico granted an ERP.
Here is the big deal to learn — there is often times a way around this. You must consult with an experienced Insurance Law Attorney and see if the exception fits your case.