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Insurance Law

Insurance 101-Insights for Young Lawyers: When, What and Why?: Notifying Insurer of a "Claim" or a Potential Claim under an EPLI Policy

Erica Dominitz and Amy Woodworth   By Erica Dominitz and Amy Woodworth, Attorneys at Law

In their article appearing in the May/June 2011 issue of Coverage, "When, What and Why: Notifying Insurer of a 'Claim' or a Potential Claim under an EPLI Policy," Erica J. Dominitz and Amy J. Woodworth explain the importance of timely reporting a claim to an employment-related practices liability insurer. Because EPLI policies are typically written on a claims-made basis, issues that frequently arise include what constitutes a claim, when notice from the policyholder to the insurer is due and when exclusions under the policy are applicable. A correlative issue with respect to determining coverage under an EPLI policy is one of timing, i.e, when was a claim made or in some cases when did the policyholder know of facts that could give rise to a claim under the policy and thus owe a duty of notice to the insurer. This article addresses those issues.

The article first examines what is a reportable claim and notes that this determination generally is based on how "claim" is defined in the EPLI policy or whether it even is defined at all. As EPLI policies are not standardized, the article stresses the importance of analyzing the subject policy's language. For instance, the article demonstrates that whether notice requirements are triggered may depend on whether the policy states that "formal administrative proceedings" or merely "administrative proceedings" constitute a "claim." Some pertinent court decisions are analyzed.

The article proceeds to analyze a related timing issue regarding EPLI exclusions that preclude coverage for "known losses" or for claims stemming from civil, criminal, administrative, or regulatory proceeding pending before the policy incepted. One court decision that is discussed found that a prior proceeding relating to a claimant's employment that fell outside an EPLI's coverage grant may trigger a prior or pending proceeding exclusion.

The article lastly examines the possibility of an insurer rescinding the policy. Some courts have found that rescission is appropriate if the policyholder's commission of a misrepresentation in the application or a failure to report a claim or known facts that could give rise to a claim is deemed material.

Thus, the article amply establishes the importance of understanding what types of events are likely to be deemed to constitute "claims" under EPLI policies.

Access the full article, When, What and Why?: Notifying Insurer of a "Claim" or a Potential Claim under an EPLI Policy, on

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