Root

I. INTRODUCTION

This case involves one of the worst nightmares faced by most every attorney, doctor, accountant or other professional covered by a malpractice insurance policy: the possibility of no malpractice coverage under a “claims made and reported” policy where a claim is made very late in the policy period and the insured learns of the claim under highly ambiguous circumstances, so the claim is not reported until there is confirmation of that claim, which is shortly after the policy has expired.

In such a situation, however, California’s traditional common law of contracts bearing on forfeitures and conditions precedent offers a way out for the hapless insured. As our Supreme Court wrote almost 60 years ago, “And where, as in the insurance policies held by O’Morrow [the insured], the condition is express and cannot be avoided by construction, the court may, in a proper case, excuse compliance with it or give equitable relief against its enforcement.” (O’Morrow v. Borad (1946) 27 Cal.2d 794, 800 [ 167 P.2d 483 ].) As we will now show, the reporting requirement in this case is such a condition that may be equitably excused under the particular circumstances of this…