Signature Healthcare Services v. Certain Underwriters at Lloyd's London CA2/4

BACKGROUND

In 2007, Lloyd’s provided Signature with a combined general liability and professional liability policy (policy) that covered Signature’s operation and management of Aurora Las Encinas Hospital (hospital) from September 8, 2007, through September 8, 2008. The policy, which provided “claims made” coverage,1 stated in relevant part:

“Claims made policies were specifically developed to limit an insurer’s risk by restricting coverage to the single policy in effect at the time a claim was asserted against the insured, without regard to the timing of the damage or injury, thus permitting the carrier to establish reserves without regard to possibilities of inflation, upward-spiraling jury awards, or enlargements of tort liability after the policy period. The insurance industry’s introduction of ‘claims made’ policies into the area of comprehensive liability insurance itself attests to the industry’s understanding that the standard occurrence-based [comprehensive general liability] policy provides coverage for injury or damage that may not be discovered or manifested until after expiration of the policy period. That

2 “COVERAGE IS ONLY PROVIDED FOR CLAIMS WHICH ARE .…