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President v. Jenkins2/6/2003
es specify a retroactive date and preclude coverage for losses occurring before that date. This is the so-called 'retro' date.
Other policies may exclude coverage for prior acts in some form or other. For example, a claims-made policy may exclude coverage for acts occurring prior to the effective date of the policy if the insured know of or reasonably should have foreseen the claim.
[15 Eric Mills Holmes, Holmes' Appleman on Insurance, ยง 111.2 at 116-117 (2d ed 2000).] After discussing differences between occurrence and claims made policies, the Appleman Treatise goes on to state,
If, five years later, claim is made against the insured for bodily injury resulting from exposure during the earlier policy periods, the claim will not be covered under any policy other than the one, if any, in effect at the time claim is made.
However, the foregoing description is somewhat oversimplified. It ignores two claims-made features that can reintroduce some or all of the uncertainty associated with the occurrence trigger. These features are the retroactive date (mentioned earlier) and extended reporting periods. . . . t will suffice to say that because of the options that these features allow (both for insureds and insurer), anyone working with the new claims-made form must acquire proficiency in arranging claims-made coverage. Failure to do so can result in uninsured losses for the insured, errors and omissions claims against producers, and the insurer's failure to collect an adequate premium. (Emphasis added.)
[Id. at 119.] Here, Dr. Jenkins, who was already insured, was solicited by C&R;to change his insurance to a form of policy where the very existence of coverage is intensely fact and date sensitive. This presents a compelling basis for charging C&R; and, I believe, its insurer Zurich with the duty to make sure that the insured is aware of the significance of crucial terms such as "effective date," and "retroactive date." As noted in Appleman, the classic claims made policy would cover a claim that was made after the policy's effective date if the alleged negligence occurred prior to that effective date. Surely, there is a duty to communicate the effect of words that qualify the ordinary provisions of a claims made policy, such as the words "retroactive date." I believe this duty is owed by the agent, particularly one who has solicited a change in coverage, and by the insurer, who should explain the import of such qualifications in any documents given to the insured in timely fashion.
It has been suggested that Dr. Jenkins elected, in effect, to take a chance, by either misrepresenting the date when his Princeton insurance expired, or by simply electing to take his chances on leaving a gap in coverage. Perhaps so, but I do not find a basis in the record for utilizing this rationale on a motion for summary judgment. In fact, on January 8, 1998, Dr. Jenkins' last contact with O'Brien prior to submitting his application on January 9, the only documents that appear likely to have been in his possession indicated that the Princeton policy would be canceled as of February 1, 1998. The retroactive cancellation was dated January 9, 1998, and presumably received shortly thereafter. Of course, it might be said that Jenkins should have informed C&R;when he received the subsequent retroactive cancellation. However, unless he understood that he would be receiving coverage containing a "retroactive date" and also understood that this would mean that there was no coverage for any losses arising before said date, a reasonable person might well have assumed that he would be covered under a claims made policy after the "effective date" for claims subseque
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