Policyholders seeking (and renewing) coverage under claims-made policies should be wary of provisions dealing with “interrelated acts.” Directors and officers liability insurance policies, for example, often contain “interrelated wrongful acts” provisions that typically provide that claims arising from interrelated wrongful acts are deemed made at the time the original claim was first made. In other words, a later claim will relate back to when the original interrelated claim first arose. The impact of such provisions on policyholders can be beneficial, or devastating. At times, a policyholder may use the “interrelatedness” of wrongful acts as a means of obtaining coverage for a new claim under an older policy. Policyholders typically seek coverage under an older policy if that policy has a broader scope of coverage or higher limits than a newer policy. Other times, however, an insurance company may use “interrelatedness” as a shield to deny coverage. Especially under circumstances where policies were issued by different insurance companies, the carrier that issued the later policy often will argue that the new claim is sufficiently related to an older claim or set of circumstances made before the policy period, and, thus, no coverage is available under the later policy.
The scope and breadth of what is deemed “interrelated” has been a hotly contested issue in insurance disputes across the country recently. Unfortunately for policyholders (and insurers), the case law has reached often irreconcilable results. Recently, however, the United States District Court for the Eastern District of Pennsylvania added some clarity to at least one policy’s definition of interrelated wrongful acts while entering a ruling in favor of the policyholders narrowing an overly broad reading of interrelatedness.
The ‘Connect America’ Decision
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