AT&T unit wins case over claims coverage - Dallas Business Journal:

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At issue in the case involvinfg was whether an insurer was obligated to cover a clai m by Prodigy even thoughg Prodigy failed to give notice to theinsureer “as soon as practicible,” as was required by the Prodigy is an Internet servicee provider that, through a seriea of acquisitions, became AT&T Internetr Services some years ago. In part because the insurancecompany wasn’t harmed by the delay, the court ruled that the insurer — Agricultural Excesxs & Surplus Insurance Co., now known as Great Americamn E & S Insurance Co. and — had to covert the claim.
“Unfortunately, we had lost in the triakl court and inthe (Fifth District) Court of Appeals,” says Werneer Powers, a litigation partner in Dallas at Hayneas and Boone who represented “It took the Texaxs Supreme Court to get it right.” Powersw worked on the case with Charleas C. Keeble Jr., of counsel at Haynes and Boone. “Thde Supreme Court of Texas decided to createnew law,” says Joe a partner in the Chicago office of Walkedr Wilcox Matousek LLP, who represented the insurance company.
The case is significant for businesseas of all sizes becausee the policy at the center of the casewas what’z known as “claims meaning claims receive coverage only if they are brough t to the insurer’s attention during the time when the policu is in effect (or in a set periosd after the policy expires). Certain types of insurancd policies thatbusinesses buy, including directorsa and officers, and errors and omissions coverage, tend to be claims-madse policies. In a decision last year in a case callesPAJ Inc. vs.
, the state Suprem e Court ruled that insurere must provide coverage in policies when the insured gives late notic ofa claim, as long as the insurerr was not harmed by the delay. Occurrence-basef policies pay for claims that occur when the policuy isin effect, regardless of when the claimj is made. Commercial general liability policies for business, as well as home and auto coveragr for consumers, are occurrence policies. “This was a major extensionb ofthat doctrine” established in PAJ vs. Hanover, Powerws says.
Normally when companies have D&O or E&O claims, “there’ds always a concern about the immediacy ofreportinb (the claim) to the (insurance) says David Metzler, the Dallas-basedx chairman of the Insurance Coverage and Litigation Practice Group at Cowles & Thompson. The Prodighy case may give companies a little breathing room onthat But, Metzler adds, “your general practice should be to reporg (the claim) as soon as you can.
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