When something goes wrong at a care facility and a lawsuit follows, families often assume that if the facility had insurance in place at the time of the incident, that insurance will pay. But not all insurance policies work that way. Some policies focus on when the injury happened; others focus on when a formal demand for money is actually made.
This distinction can determine whether an insurer is required to defend and pay — even after a large jury verdict. For patients, families, and small business owners alike, understanding the difference between the two types of policies matters, because a gap in timing can leave a serious loss uncovered.
These issues came into focus in National Assisted Living Risk Retention Group v. Bishop, a decision from Florida’s First District Court of Appeal. The court examined whether a phone call reporting a death, and questions from investigating agencies, counted as a “claim” under a claims-made insurance policy.
Key Takeaway
Under a claims-made insurance policy, coverage generally depends on when a formal demand for damages is made — not simply on when the underlying injury occurred. A report of an incident is not the same thing as a claim.
What happened in this case?
An elderly man declared a vulnerable adult was placed in an assisted living facility. In July 2012, he wandered away from the facility unsupervised and was struck and killed by a truck while trying to cross a busy intersection. Investigators concluded the truck driver was not at fault.
After the death, several state agencies opened investigations, and the facility manager called its insurance agent to report the death and the investigations. At that point, no one had said they intended to sue or seek compensation. The agent told the manager to call back if a lawsuit was filed or charges were brought.
Two years later, in 2014, the man’s estate filed a wrongful death lawsuit. That case resulted in a $20 million judgment. The estate was then assigned the facility’s rights under a 2012 insurance policy and sued the insurer for denying coverage and refusing to defend.
What was the legal dispute about?
The insurer argued that no “claim” was ever made under the 2012 policy while it was in effect. The trial court had disagreed, finding that the manager’s 2012 phone call — and later questions from agencies about whether the facility carried required insurance — amounted to a claim. The appeal turned on whether that was correct.
Because the estate’s assignment of rights was limited to the 2012 policy, that was the only policy the appellate court considered. The estate had earlier raised claims connected to later 2013 and 2014 policies but voluntarily withdrew them.
What is the difference between a claims-made and an occurrence policy?
The court explained the two basic models of liability insurance and why the difference is decisive here.
- Occurrence policy: coverage applies if the negligent act or omission happens during the policy period, regardless of when the claim is later made.
- Claims-made policy: coverage applies to claims made during the policy period arising out of incidents during the policy period.
The court noted that the policy stated in bold print, in several places, that it was a claims-made policy. Because of that plain language, the court treated it as a claims-made policy, where the timing of the claim — not just the timing of the injury — controls.
Notice of an injury is not the same as a claim
The court drew a careful line between reporting that an incident happened (which might someday lead to a claim) and an actual claim — a lawsuit or demand for money made on behalf of the injured person. Only the second triggers coverage under a claims-made policy.
Why did the court decide there was no covered claim?
The court looked at how the policy defined a “claim.” Under either coverage part, a claim was tied to a demand for monetary damages or services because of an injury — not to when the injury itself occurred.
Applying that definition, the court concluded the 2012 phone call was, at most, notice of an incident that might later produce a claim. The agency investigations did not qualify either, because they were not brought on behalf of the injured man or his estate. The first actual demand for damages came with the 2014 wrongful death lawsuit — long after the 2012 policy had expired in early 2013.
The court added that even setting aside a disputed retroactive cancellation of the policy for nonpayment, the 2012 policy still expired before any claim was made. So the timing problem remained regardless.
Why does this matter to families and facility owners?
The decision illustrates how much the structure and timing of an insurance policy can affect whether a loss is covered. With a claims-made policy, letting coverage lapse or failing to secure extended reporting (“tail”) coverage can leave incidents that occurred during the policy period without protection once the policy ends.
The court also noted a general rule about assignments: someone who is assigned another party’s contract rights generally stands in that party’s shoes and takes only the rights the assignor actually had. Here, that meant the estate’s ability to collect was limited by the facility’s own coverage situation.
The appellate court reversed the judgment that had been entered for the estate. This explains a legal principle; it does not suggest how any other dispute would be resolved.
Disclaimer: This post is for general information only, is not legal advice, does not create an attorney-client relationship, and does not predict or guarantee any result. The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before deciding, ask for free written information about the lawyer’s qualifications and experience.