(Article from Insurance Law Alert, April 2021)
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Addressing a matter of first impression under Kentucky law, a Kentucky appellate court ruled that a notice provision in a claims-made-and-reported policy was unambiguous and was not subject to the notice-prejudice rule. Darwin National Assurance Co. v. Kentucky State Univ., 2021 WL 1045716 (Ct. App. Ky. Mar. 19, 2021).
On September 2, 2015, former employees of a university sued for wrongful discharge, among other claims. The university sought coverage under a professional liability policy in effect from July 1, 2014 to July 1, 2015. The policy stated that a claim was deemed to have been made on the date that the university received notice of the claim, and required the university to give the insurer written notice “as soon as possible” but no less than ninety days after the policy’s end date. The university notified its insurer of the claim on October 2, 2015—93 days after the policy’s end date. The insurer denied coverage based on untimely notice. In ensuing litigation, a Kentucky trial court granted the university’s summary judgment motion. The trial court ruled that the notice provision was unambiguous, but that the notice-prejudice rule applied, and that notice was arguably timely under Kentucky’s three-day mailbox rule. The appellate court reversed.
The appellate court agreed with the trial court that the ninety-day notice provision was unambiguous, but overturned the trial court’s ruling as to the notice-prejudice rule. The court explained that imposing a prejudice requirement would “rewrite the Policy” and “grant KSU coverage it did not purchase.” The appellate court also held that Kentucky’s mailbox rule applies only to the service of certain court-related papers, not to notice requirements imposed by contract.