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All D&O policies reviewed for FC&S D&O provide claims-made coverage. The obligation of an insurer to pay for a claim and related expenses under a claims-made policy is triggered only if a covered claim is first made against the insured during the policy period or extended reporting period. Claims-made policies contrast with the more common occurrence-basis general liability and umbrella policies, which are triggered by the date the loss or injury occurs, even though the claim may not be made until months or years after the policy expires. A graphic example of the key difference between these two types of policies is shown in the following chart.

 Differences between Claims-Made Policy and Occurrence Policy

In the previous example, assume a loss occurs in 2017 but the resulting claim is not presented until 2019. A claims-made policy in effect during 2015 would not provide coverage for the claim. Rather, the 2017 claims-made policy would be called upon to respond to the claim. In contrast, an occurrence-basis policy in effect in 2015 would respond to the 2017 claim, since the occurrence resulting in the claim took place in 2019.

 The mechanics of claims-made D&O policy forms are not often as simple as depicted in the previous example. Definitions, claim provisions, and other reporting requirements are integral factors in defining the scope of the policy's claims-made features.

 The term trigger, which is used frequently in discussions of claims-made coverages, refers to the events or circumstances that actuate the policy's coverage. To determine the policy's trigger requirements, it is necessary to locate and identify the following claims-made features and requirements within the policy form being reviewed. These elements combined constitute the policy trigger.

 1.What constitutes a claim and when is a claim made?

2.What are the requirements in reporting the claim to the insurer?

3.What are the time limitations regarding when the wrongful act is deemed to take place?

 The policy provisions that answer these questions are often not easy to find, as they may be hidden in the most unexpected parts of the policy. In some cases there may be nothing in the policy to answer the question. For example, while most insurers define claim, many policies do not contain a claim definition.

 What Constitutes a Claim?

 A good place to start in evaluating the important elements of any claims-made policy is the definition of claim. An example of a policy definition of claim is given below. For a further explanation, refer to Claim, Related Claims, and Potential Claim.

 

A. “Claim” means:

1. a written demand for monetary damages or non-monetary relief;

2. a civil proceeding commenced by service of a complaint or similar pleading;

3. a criminal proceeding commenced by filing of charges;

4. a formal administrative or regulatory proceeding, commenced by a filing of charges, formal investigative order, service of summons or similar document;

5. an arbitration, mediation or similar alternative dispute resolution proceeding if the Insured is obligated to participate in such proceeding or if the Insured agrees to participate in such proceeding, with the Company's written consent, such consent not to be unreasonably withheld; or

6. a written request to toll or waive a statute of limitations relating to a potential civil or administrative proceeding;

against an Insured for a Wrongful Act, provided, that Claim does not include any labor or grievance arbitration or other proceeding pursuant to a collective bargaining agreement.

A Claim shall be deemed to be made on the earliest date such written notice thereof is received by an Executive Officer.

St. Paul Travelers, NDO-3002 (Ed. 07-05)

 The definition of claim varies widely in D&O policies. The absence of a definition of claim is not a negative policy feature. Some policies that do not define claim provide more liberal coverage than policies that restrictively define claim.

 Claim-Reporting Requirements to the Insurer

 Claim-reporting requirements establish when claims made against the insured must be reported to the insurer. Often the policy requires that the claim be reported to the insurer during the policy period or any extended reporting period or within a specified number of days after claim is made. Sometimes language in the insuring agreement includes such requirements, but most policies provide a more elaborate description elsewhere in the policy under captions such as Notice of Claims, Notice, or Claim Reporting. The following are some examples.

 Notice Required During the Policy Period

 INSURING AGREEMENTS

A.DIRECTORS AND OFFICERS LIABILITY

The Insurer shall pay the Loss of each and every Director or Officer (hereinafter called the Insureds) arising from any claim first made against the Insureds and reported to the Insurer during the Policy Period by reason of any Wrongful Act.

SECTION 5 LOSS PROVISIONS

The Company or the Insureds shall, as a condition precedent to the obligations of the Insurer under this Policy, give to the Insurer notice in writing of any claim made against the Insureds as soon as practicable and during the Policy Period or during the Discovery Period, if effective in accordance with Section 7.

Tudor Insurance, TU DOL 2 (9/92)

 Notice Required Within a Specified Time

 A.INSURED'S DUTIES IN THE EVENT OF A CLAIM OR LOSS

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