In latest edition of The Wright Toolbox:
- Be Smarter Than Harvard
Be Smarter Than Harvard
Harvard University is widely considered to be one of the best institutions of higher learning in the country, if not the world. This is a place of really smart people doing really smart things. And yet, Harvard may lose millions of dollars because it failed to do a really simple thing – provide timely notice to its insurance company. This article is just a quick reminder to everyone that if you have an insured claim situation arise, please make sure to determine what your notice obligations are under your applicable insurance policies and then make sure you comply with those requirements. Failure to do so could result in lost coverage.
In the Harvard case, its undergraduate admissions program was sued. Harvard had primary insurance coverage for such a suit, and also had an excess insurance policy from a different carrier. The excess policy was designed to address such things as excess defense costs over the policy limit of the primary policy. Harvard incurred over $25 million in litigation costs addressing the lawsuit, and, indeed, had to turn to the excess policy.
The excess policy was a claims made and reported policy that required a claim to have occurred during the policy period and the insured to provide a written notice of the claim within 90 days after the end of the policy period. The claim occurred within the policy period, but Harvard did not provide notice to the excess policy carrier until more than a year after the policy period expired.
The excess carrier denied coverage and Harvard filed suit against the carrier seeking coverage arguing that the late notice was not prejudicial and that the carrier had actual knowledge of the litigation. The court granted summary judgment in favor of the excess carrier and held that Harvard’s failure to satisfy the condition precedent of providing timely notice invalidated the coverage under the excess policy. Now, the Harvard case was decided under Massachusetts law and the same result may not have been reached had the case been decided under Maryland law, but the point is still valid – know your policy notice requirements! Be smarter than Harvard.
If you have any questions regarding this matter, please do not hesitate to contact any member of the WCS Insurance Defense Practice Group.