Why Insurance Policy Language Matters

Nonlawyers often roll their eyes when they hear lawyers obsessing about minutiae, such as the placement of a comma or the difference between "the" and "an." When it comes to interpreting an insurance policy, however, language matters.

The recent case of Emmis Communs. Corp. v. Ill. Nat’l Ins. Co., 937 F.3d 836 (7th Cir. 2019), from the Seventh Circuit Court of Appeals serves as a good reminder that loose language in a policy can lead to unexpected results.

Those results can be especially problematic when the language at issue deals with the reporting requirements of a claims-made-and-reported policy. Claims-made-and-reported policies contain a "prior notice" exclusion restricting coverage for claims and circumstances that were reported under a prior policy.

These policies also contain language providing that (1) where an insured reports a circumstance that later gives rise to a claim, the claim is deemed first made during the policy period, and (2) claims that are related to a previously reported claim are treated as a single claim, first made at the time the original claim is reported.

Together, these provisions operate to ensure that claims that are brought during an earlier policy period and claims that are related to a circumstance or claim reported during an earlier policy period are covered under the earlier policy, not the current policy.