Reporting Claims And Circumstances In Claims-Made Policies

When an insured under a claims-made policy becomes aware of an event that could give rise to a claim, is he or she obligated to report it to the insurer? If no obligation exists, is there any advantage or disadvantage to reporting the event to the insurer? Two recent cases illustrate that the answers to these questions entail both a careful reading of the policy in question and a careful consideration of the consequences that could result.

Under a claims-made policy, coverage is only triggered when a claim against the insured is made, and not when the event giving rise to the claim occurred. Some claims-made policies, however, also require an insured to report to the insurer any accident or occurrence that could give rise to a claim. The Supreme Court of Canada reviewed the effect of such a requirement in Jesuit Fathers of Upper Canada v. Guardian Insurance Company.