In a recent blog post we discussed whether prejudice must be shown for a claims-made carrier to prevail on a late notice claim. In that case, the answer was no prejudice need be shown. A United States Court of Appeals for the Sixth Circuit decision on an excess claims-made policy reaches the same result.

In Ashland Hospital Corp. v. RLI Ins. Co., No. 15-5377 (6th Cir. Feb. 29, 2016), the policyholder gave notice to its primary D&O carrier of a governmental investigation on the last day permitted under the primary claims-made policy. But the policyholder did not give notice to the excess insurer until six months later. The excess carrier denied coverage based on the policyholder’s failure to satisfy the excess policy’s notice provisions.

The policyholder brought suit even thought it conceded that the notice was late. Making the argument typically found in late notice cases, the policyholder claimed that it was entitled to coverage under the excess policy because the excess insurer did not show that it was prejudiced by the late notice. The policyholder relied on a state court case (Kentucky Supreme Court) that held under an occurrence-based policy that the insurer must show prejudice before rejecting a claim for late notice.

The district court predicted that the state court would not extend the notice-prejudice rule to a claims-made policy like the excess policy, which contained unambiguous notice requirements as condition precedent to collecting under the policy. In a leap day decision, the 6th Circuit agreed and affirmed dismissal of the policyholder’s action. The case is not long and the reasoning is not elaborate. It is another example of where a claims-made policy is issued to a sophisticated insured with unambiguous notice requirements that act as a condition precedent to coverage, the insurer does not have to show prejudice to prevail on a late notice disclaimer.