No obligation to defend when formal notice is received before the period of insurance | Wiley Kidney LLP


The Arkansas Court of Appeals, applying Arkansas law, upheld a trial court’s ruling that an insurer had no duty to defend when the insured received a demand letter constituting a claim under the policy before the period of insurance. White c. Great Am. Assured. Co.641 SW3d 668 (Ark. App. Feb. 23, 2022).

The insured, a real estate agent, sought coverage under his professional liability insurance policy for a lawsuit brought during the policy’s insurance period of May 13, 2018 to May 13, 2019. The underlying plaintiffs have alleged that the real estate agent was responsible for damage to the plaintiffs’ home during an open house. Prior to filing the lawsuit, the plaintiffs sent letters to the realtor on April 22, 2018 and May 2, 2018 claiming the realtor was responsible for the damage to the home and asking for insurance contact information. The policy provided that it “applies only to claims which are first made against an insured during the period of insurance” and defines “claim” to include “a written request for money or services received by an insured”. The insurer refused coverage for the lawsuit on the grounds that the relevant claim was first made before the policy took effect, when the estate agent received the demand letters. The real estate agent sued the insurer, asking for a statement that the insurer had a duty to defend the real estate agent. The trial court granted summary judgment to the insurer, finding that no coverage was available under the policy and therefore the insurer had no duty to defend.

The Court of Appeal upheld, concluding that the two letters received before the policy period “clearly constitute a ‘claim'” and that, therefore, the relevant claim was first made before the policy period. . The appeals court found that, among other things, the letter informed the estate agent that the plaintiffs held the agent “responsible for damages suffered by them and their home”, that they expected the real estate agent pays for repairs and was asking about insurance. In short, “[t]to treat letters as anything other than a claim requires a tortured construction of [the policy’s] plain text and meaning.

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