Homestead Insurance v. American Empire Surplus Lines Insurance

Introduction

“Claims made” insurance policies limit coverage to claims made during the policy period. An insurer thus bears responsibility only for the allowable claims filed during its policy period. Two insurers issued one-year policies to the insured, an escrow company. One complaint was filed against the escrow company during each of the policy periods. We reject the argument by the insurer of the later policy that the earlier policy should cover claims against the insured arising from both complaints. We hold that each insurance policy covers the claim made during its policy period, and affirm summary judgment in favor of the insurer that issued the earlier policy.

Plaintiffs Verdugo Escrow Company (Verdugo), One Central Bank, CB Service Corporation, and Lois McCauley (president of Verdugo, and an officer of CB Service Corporation) filed a complaint for breach of contract, tortious breach of the implied covenant of good faith and fair dealing, and declaratory relief against defendants Homestead Insurance Company (Homestead), American Empire Surplus Lines Insurance Company (American Empire), and other defendants not parties to this appeal.

Homestead filed a…