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\\nNotice-Prejudice Rule Does not Apply to Claims Made and Reported Policy\\n\\nThe Kentucky Supreme Court was asked to determine if the \\nclaims-made-and-reported management liability policy ("Policy") Allied \\nWorld Specialty Insurance Company ("Allied World"), issued to Kentucky \\nState University ("KSU") provided coverage because KSU did not comply \\nwith the Policy\'s notice provisions. The trial court applied the notice \\nprejudice rule and the Court of Appeal reversed. in Kentucky State \\nUniversity v. Darwin National Assurance Company N/K/A Allied World \\nSpecialty Insurance Company, No. 2021-SC-0130-DG, Supreme Court of \\nKentucky (June 15, 2023)\\n\\nFACTS\\n\\nThe Policy KSU purchased from Allied World was for the period from July \\n1, 2014 to July 1, 2015. The Policy allows claims made against KSU \\nwithin the policy period to be reported to Allied World up to ninety \\ndays after the end of the policy period. The Policy expired July 1, \\n2015, and the 90-day extended reporting period ended September 29, 2015.\\n\\nDuring the policy period two professors submitted Notices of Charges of \\nDiscrimination to the United States Equal Employment Opportunity \\nCommission ("EEOC") and Kentucky Commission on Human Rights \\n(collectively, "EEOC Charges") . \\n\\nKSU eventually sued Allied World and both moved for summary judgment. \\nThe circuit court granted summary judgment in favor of KSU.\\n\\nThe circuit court concluded that the notice-prejudice doctrine applied. \\nThe Court of Appeals determined that the notice-prejudice rule does not \\napply to the Policy in this case.\\n\\nANALYSIS\\n\\nThe primary issue before the Supreme Court was whether the circuit court\\n properly interpreted the notice provisions within the \\nclaims-made-and-reported insurance policy issued by Allied World to KSU \\nand then, based upon that interpretation, correctly assessed the role, \\nif any, that the notice-prejudice rule plays in this case.\\n\\nTHE POLICY.\\n\\nThe Policy provisions which explain the insurer\'s coverage obligations \\nin relation to the insured\'s reporting obligations and which present the\\n notice requirements are found in three clauses all of which require \\nnotice no later than ninety days after the end of the policy period.\\n\\nFurthermore, with regard to reporting beyond the policy period, the \\nPolicy also provided KSU the right to purchase a Discovery Period after \\nthe expiration of the Policy. KSU did not purchase Discovery Period \\ncoverage.\\n\\nTHE NOTICE-PREJUDICE RULE.\\n\\nThe Policy expressly informed KSU that a condition of coverage - a \\ncondition precedent - was giving written notice of a claim as soon as \\npracticable, but in no event was such notice of any claim to be provided\\n to Allied World later than ninety days after the end of the Policy \\nperiod. \\n\\nThe Policy unambiguously informed KSU that if the notice provisions were\\n not met, Allied World had no obligation to KSU under the Policy.\\n\\n\\nApplication of the Notice-Prejudice Rule to Claims-Made-and-Reported \\nPolicies.\\n\\nThe Supreme Court concluded: "A claims-made-and-reported policy provides\\n coverage only for claims made against the insured and reported to the \\ninsurer during the life of the policy regardless of when the underlying \\nincident occurred. Timely notice of a claim is the event that not only \\ntriggers coverage, but also defines its scope."\\n\\nZALMA OPINION\\n\\nThe claims made and reported liability insurance policy was designed to \\navoid long-term liability exposure faced by an "occurrence" policy and \\nto avoid the insured\'s ability to extend reporting requirements by use \\nof the notice-prejudice rule that allowed a late report as long as the \\ninsurer was not prejudiced by the delay. In this case a three day delay \\nwould not cause prejudice to the insurer but breached the clear and \\nunambiguous condition precedent to coverage.\\n\\n(c) 2023 Barry Zalma & ClaimSchool, Inc.\\n\\n