Case of First Impression Requires Enforcement of Claims Made Notice Requirement in Kentucky

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Allied World Specialty Insurance Company (Allied World), appeals an order granting summary judgment to Kentucky State University (KSU). The issue is whether the notice-prejudice rule applies entitling KSU to coverage under a claims-made-and-reported policy after providing notice of the claim to Allied World three days late. In Allied World Specialty Insurance Company) v. Kentucky State University, NO. 2019-CA-1811-MR, Commonwealth of Kentucky Court of Appeals (MARCH 19, 2021) the Court of Appeals resolved a case of first impression.

ZALMA OPINION

Kentucky has joined the courts across the nation that refuse to apply the notice/prejudice rule to claims made, and claims made and reported policies. Therefore, three days late was fatal to KSU’s claim even though the policy gave them 90 days after the expiration of the policy to report the claim and new of the claim for more than half a year, KSU did nothing in a timely fashion. By sitting on its rights, by failing to buy the offered extension, they lost.