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Pennsylvania Supreme Court Recognizes No Prejudice Rule For Claims-Made Insurance Policies

Kleinbard lawyers Robert Bodzin, Paul Gagne and Melissa Prince obtained a ruling from the Pennsylvania Supreme Court affirming a Superior Court decision that an insurance company need not prove it was prejudiced by late notice from a policyholder insured under a claims-made policy. The ruling was a victory for Kleinbard’s client, Columbia Casualty Company. Columbia’s policyholder, itself, an insurance company, provided late notice of a bad faith claim that it later settled for $37.2 million dollars. Following a two week trial, a Philadelphia jury found that Columbia’s policyholder had failed to provide notice “as soon as practicable” after being sued by its policyholder for more than $75 million dollars in bad faith damages. The decision affirms the finding of the Superior Court that notice is an essential element of a claims-made policy and, when it is late, an insurance company need not prove that a different outcome would have resulted if notice had been provided in a timely fashion.