In Ulico Casualty Company v. Allied Pilots Association (APA), the Texas Supreme Court rejected an insured’s attempt to rewrite an insurance policy by claiming that an insurer had waived or was estopped from denying coverage for an untimely claim under a claims-made policy.

The policy was effective from August 25, 1998 through October 25, 1999. On October 4, 1999, American Airlines commenced suit against APA. APA notified its attorney and broker, but not Ulico. APA did not notify Ulico until November 5, 1999. In December 1999, Ulico informed APA that its claim was being reviewed, and that APA would be notified of Ulico’s coverage decision, and advised that no expenses could be incurred without Ulico’s prior written consent. In March 2000, Ulico informed APA that it would provide a defense, but reserved its right to deny coverage. In April 2001, Ulico informed APA that it had agreed to cover reasonable and necessary defense expenses. In May 2001, APA’s attorney submitted a bill to Ulico for approximately $635,000 in fees, without having had any contact with Ulico regarding the lawsuit.

On Ulico’s declaratory judgment claim, the trial court entered judgment in favor of APA, concluding that based on its actions following receipt of notice of the lawsuit, Ulico had waived or was estopped from denying coverage. The Texas Supreme Court reversed the decision concluding that by the time APA had informed Ulico of the lawsuit, the policy had lapsed. Since APA failed to comply with the express terms of the policy, and because Ulico’s actions had not prejudiced APA, the court concluded that APA could not use the doctrines of waiver and/or estoppel to effectively re-write the policy to provide coverage where none exists.