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Thoracic Cardiovascular Associates v. St. Paul Fire and Marine Insurance Co.9/13/1994
redefinition itself depends on the more common usage as a component: a "claim" is a report of a made or potential claim.
Elsewhere in the policy, the writers wholly ignore their redefinition and speak plainly and differentially of a report and a claim made, confining the latter term to usage one. In the section describing the insured's reporting obligation, the policy provides:
Tell us or our agent what happened as soon as possible. Do this even though no claim has been made but you or another protected person is aware of having done something that may later result in a claim.
If Professional Hospital Liability Protection - Claims Made is included in this policy, we won't consider a "Patient Incident Report" or "Variance Report" to be your report of a claim made - even if you send it to us or one of our agents.
Emphasis added. In these sections, the policy actually achieves the "plain, easy-to-understand English" that it promises: a claim made against the insured is one thing; the insured's "report of a claim made" is another.
Keeping the clarity of this distinction in mind -- one, I reiterate, that the policy writers themselves were forced to use in order to write intelligibly -- I'll turn to the letter by which St. Paul attempted to warn its insured what it would risk by terminating the policy without tail coverage. That letter reads as follows:
This is a "claims made" form of coverage. This means you do not have coverage for claims arising out of acts performed prior to the termination for which a claim may be made after the termination date, unless you purchase reporting endorsement coverage.
Reporting endorsement coverage extends the time in which a claim may be made for acts which occurred before the termination date. . . .
You may not need this endorsement extension if you have obtained a replacement policy providing coverage for prior acts.
IF YOU DO NOT PURCHASE THE OPTIONAL REPORTING ENDORSEMENT WITHIN THE TIME PERIOD STATED IN YOUR POLICY, OR IF YOU DO NOT OBTAIN COVERAGE UNDER A REPLACEMENT POLICY, THEN YOU DO NOT HAVE COVERAGE FOR CLAIMS ARISING OUT OF ACTS PERFORMED PRIOR TO THE TERMINATION DATE FOR WHICH A CLAIM MAY BE MADE AFTER THE TERMINATION DATE.
This letter, the most significant part of which St. Paul capitalized for emphasis, is helpful and instructive as far as it goes. Conspicuous by its absence, however, is the following additional warning (paraphrasing St. Paul's own language) that would have made a difference in this case:
Further, if you do not purchase the optional reporting endorsement within the time period stated in your policy, or if you do not obtain coverage under a replacement policy, then you do not have coverage for claims that you have not discovered and reported to us prior to the termination date, even if those claims were made against you prior to the termination date and arise out of acts performed prior to the termination date.
To conclude, I would agree with the majority that this insurer had assigned the risk of impossibility to its insured if the policy writers, without blurring the clear distinction between a claim and a report, had plainly and unambiguously informed the insured that the policy applied only to claims or potential claims that were reported to the insurance company during the policy period, whether or not those claims were made during the policy period. Likewise, I would agree with the majority that this insurer had assigned the risk of impossibility to its insured if, in its termination letter, the insurer had plainly and unambiguously informed the insured that, if tail coverage were reject
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