What Amounts To A Circumstance?A recent decision by an English court throws light on what circumstances may require notification under a claims-made policy claims-made policy Malpractice A type of medical malpractice or professional liability insurance policy for a physician or other health care professional in which coverage is provided for any claim that occurs only while the policy is in force . Background As its name implies, cover is triggered under a 'claims-made policy' when the insured receives a notice during the policy period of a claim that he or she is liable. The notice can be oral or in writing. (In Australia, the Insurance Contracts Act 1984 (Cth) governs notifications, especially in sections 40 and 54.) In the UK, the insured must notify the underwriter that the insured has received the notice during the same policy period, or within the days of grace given after it ends. Claims-made policies are also triggered by notifying the underwriter of a circumstance the insured becomes aware of that may lead to the insured receiving a claim of liability. Once a circumstance is notified to the underwriter, it 'anchors' cover during that policy period. Subsequently, if the insured receives notice of a claim in relation to the circumstance, the cover that existed during that policy period potentially responds, even after the policy period has ended. What amounts to a circumstance requiring notification to the underwriter is a critical issue for insureds. On the one hand, underwriters do not want to be bombarded with fanciful fan·ci·ful adj. 1. Created in the fancy; unreal: a fanciful story. 2. Tending to indulge in fancy: a fanciful mind. 3. possibilities. On the other, a failure to notify a qualifying circumstance can be fatal to the insured's cover. Most policies exclude from cover a circumstance that existed in a prior policy period (although some have extensions that cover this, if the insured is continuously covered with the same underwriter over that period). The case The recent English decision of HLB HLB Hong Leong Bank HLB Hydrophilic-Lipophilic Balance HLB Horton Lees Brogden Lighting Design (company with studios in New York, San Francisco, Los Angeles, and Boston) HLB Hotels Licensing Board (Singapore) Kidsons v Lloyd's Underwriters [2007] EWHC EWHC High Court of England and Wales 1951 (Comm See comms. ) provides some useful guidance in this area. The Court was required to examine very closely what amounted to a circumstance requiring notification under a claims-made policy. The Court made the following findings: A circumstance which may give rise to liability is one which, 'objectively evaluated, creates a reasonable and appreciable possibility that it will give rise to a loss or claim against the assured'. A document that is not intended by the insured to constitute notice to an underwriter of a circumstance, but which meets the objective criteria, takes effect as a valid notice if it is, in fact, communicated to the underwriter. A policy requiring a notice to be in writing must be, 'sufficiently clear and unambiguous that it leaves the recipient in no reasonable doubt that the assured is by the communication purporting to give notice of a circumstance'. The notice must not be premature. If at the time the insured purports to give notice, 'he is not aware of a relevant circumstance, then the notice is ineffective'. The liability must be causally related to the circumstance notified. A notice requiring notice 'to the Underwriters' meant each underwriter directly, subject to any prior agreement to give notice to just the lead or an agent. Implications This is a welcome clarification of the legal requirements in this critical area. All brokers placing cover under claims-made policies, and all underwriters issuing such policies should take note. Phillips Fox has changed its name to DLA Phillips Fox This article or section needs sources or references that appear in reliable, third-party publications. Alone, primary sources and sources affiliated with the subject of this article are not sufficient for an accurate encyclopedia article. because the firm entered into an exclusive alliance with DLA Piper DLA Piper (known until 4 September 2006 as DLA Piper Rudnick Gray Cary) is the third largest law firm in the world by number of attorneys after Clifford Chance and Baker & McKenzie. , one of the largest legal services legal services n. the work performed by a lawyer for a client. organisations in the world. We will retain our offices in every major commercial centre in Australia and New Zealand New Zealand (zē`lənd), island country (2005 est. pop. 4,035,000), 104,454 sq mi (270,534 sq km), in the S Pacific Ocean, over 1,000 mi (1,600 km) SE of Australia. The capital is Wellington; the largest city and leading port is Auckland. , with no operational change to your relationship with the firm. DLA Phillips Fox can now take your business one step further -- by connecting you to a global network of legal experience, talent and knowledge. This publication is intended as a first point of reference and should not be relied on as a substitute for professional advice. Specialist legal advice should always be sought in relation to any particular circumstances and no liability will be accepted for any losses incurred by those relying solely on this publication. Mr Grant MacDonald DLA Phillips Fox 201 Elizabeth Street Elizabeth Street can refer to:
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