July 2008
Notice-of-Circumstances Provisions in Claims-Made PoliciesConsiderations for D&O Insurers of Subprime Liabilities
By Victor F. Mustelier
As insurers under D&O policies respond to the claims activity likely to be generated by the subprime mortgage crisis, they should consider whether their policyholders are complying with notice provisions commonly found in “claims-made” policies dealing with notice of potential claims and the submission of claims outside of the current policy period. This easily overlooked issue has potentially serious consequences for an insurer — affecting the scope of its coverage obligations and the exposure of its limits. In coverage litigation, courts have often found that policyholders who fail to comply with these “notice-of-circumstances” clauses are not entitled to coverage.
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