Failed Bank’s directors’ notice to D&O insurer timely

by Chris Graham and Joseph Kelly

Anderson, et al v. The Cincinnati Insurance Company, et al,Case No. 1:12-156-HMH (W.D. N.C. Feb. 5, 2013)

Directors of failed bank obtained a declaration that notice to D&O insurer of FDIC lawsuit was timely. Bank failed on January 21, 2011 and FDIC filed suit on December 29, 2011, the same day directors gave notice. The D&O policy period was 11/3/07 to 11/3/10, with a 60-day “basic” extended reporting period which allowed for notice of claims 60 days beyond end of policy period; and the policy had a 12-month “supplemental” extended reporting period via endorsement allowing for an additional 12 months after the policy period to report claims. The insured’s notice of claim was more than 12 months but less than 14 months after the expiration of the policy period. The issue was whether the insured forfeited the 60-day “basic” extended reporting period by purchasing the 12 month “supplemental” extended reporting period. The court found that the “the evidence is clear that the Plaintiffs did not know or intend to forfeit the 60-day Basic Extended Reporting Period. To the contrary, the only inference that can be drawn from the evidence is that the Plaintiffs paid for 14-months of extended reporting coverage, which includes the 60-day Basic Extended Reporting Period and the 12-month Supplemental Extended Reporting Period.”

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