No Coverage For Claim Made During Policy Period But Reported After Policy Period

The U.S. District Court for the Southern District of Illinois, applying Illinois law, has held that there is no coverage under a claims-made policy for a claim made during the policy period but reported after the policy period expired. Berkley Ins. Co. v. Caraway, 2025 WL 3280220 (S.D. Ill. Nov. 25, 2025).

The insured, an attorney, was sued on February 11, 2023 by a trust in connection with his alleged default on a loan, but he did not notify his lawyers' professional liability insurer of the suit until July 20, 2023, after the policy's June 1, 2022 to May 1, 2023 policy period. The insurer denied coverage, and the insured assigned his claim for coverage to the trust. The insurer filed a declaratory judgment action against the trust seeking a declaration that there is no coverage for the underlying suit based on, among other grounds, that the suit was not timely reported during the Policy Period.

The policy provided coverage for a "Claim that is both first made against the Insured and reported in writing to the Insurer during the Policy Period, or any Extended Reporting Period, if applicable . . . by reason of an act or omission in the performance of Legal Services." The court concluded that the policy required that a claim be made and reported during the policy period, and while it was undisputed that the claim was made on February 11, 2023, during the Policy Period, the claim was not reported to the insurer until July 20, 2023, more than two months after the policy period expired. Thus, the court concluded that there was no coverage for the suit.

The trust argued that the claim was timely reported during either of the extended reporting periods offered by the Policy. The automatic 60-day extended reported period in the policy is defined as "the period of time after the end of the Policy Period for reporting Claims that are first made against the Insured during the applicable Extended Reporting Period." The policy's optional extended reporting period applies only to "Claims that are first made against the Insured during the Optional Extended Reporting Period by reason of an act or omission that occurred prior to the end of the Policy Period which is otherwise covered by this Policy." The court rejected the trust's argument, holding that the reporting periods unambiguously applied only to Claims first made during those respective periods. The court also rejected the trust's argument that the policy's reporting requirements were ambiguous because the policy period was shortened by endorsement without addressing the extended reporting periods, concluding that the endorsement unambiguously changed the policy period without creating any ambiguity as to the policy's reporting requirements. Lastly, the court rejected the trust's argument that the insurer did not demonstrate prejudice from the insured's late notice, holding that under well-established Illinois law, timely reporting within the policy period is a condition precedent to coverage with respect to claims-made policies, and insurers do not need to demonstrate prejudice.

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