Claims Made Bites: Underwriters – You’re Doing Too Much

Underwriters, have you ever gotten this call before? “Hey, this is Mr. Broker. Look, my client, he might be, you know, HYPOTHETICALLY there may be a claim-ey sort of situation, you know what I mean? Now he’s asking me if they should report this as a potential claim or something. What do you think he should do?”

Underwriters, you really should not answer this question.

And brokers, not only should you NOT be asking this question, but even if you get the underwriter to answer this question for you, it doesn’t really help you out when the claim department disagrees with the underwriter later.

Using underwriters to navigate potential claims reporting is a fools’ errand. We’re going to look at:

• Underwriting file is inadmissible if the policy exclusion is clear and unambiguous (4 corners rule)
• Failure to report per the policy’s reporting condition is a great way to get a claim denied
• Unless “Speak to your underwriters” is in that policy condition, you have no reason to bank on your underwriter’s feedback

You Shall Not Pass (The 4 Corners)

Underwriters are great resources for helping to understand the policy, understand what risks are being transferred to their carrier, and how to flag certain advantages of their product to the policyholder. Brokers (mistakenly) assume that underwriters are also great resources to help navigate potential claims. They’re not, and this recent case exemplifies why the underwriter won’t be able to help if a claim gets denied.

In Lannon v. Everest National Insurance Company (N.Y. Supreme Ct., April 2026), a plaintiff sought to get a hold of the carrier’s underwriting file as they were seeking to litigate against that carrier’s denial of a claim. I think a lot of us brokers assume that, should push come to shove, I can just produce my underwriter’s correspondence to show that they were aware of the situation, or maybe they helped affirm a coverage question that their carrier is now trying to back out of.

The New York Supreme Court disagrees.

“Where an insurance policy is unambiguous, extrinsic evidence of its meaning is not considered.” 

“Further, [the carrier] demonstrated that the redacted portions of the “notes report” were privileged.” 

There is a legal precedent in our court system that says if a policy clearly and unambiguously excludes something, then extrinsic evidence such as underwriter correspondence, marketing, anything outside of the “4 corners” of the policy is inadmissible.

For brokers who are thinking, “At least I got the underwriter to confirm this in writing”, that email is only good insofar as the exclusion in dispute is ambiguous. If it’s unambiguous, then the court will never see your archived emails.

This is just one of the many misunderstandings that brokers have regarding the reporting of claims. Just because the underwriter understands the situation does NOT mean that the claims reporting condition of the policy has been satisfied. In fact, the legal precedence is that the underwriter is NOT a claim reporting resource, and brokers who rely on their underwriters feedback as to whether or not they should report claims end up with claim denials they were never expecting.

Claims Reporting Condition is Not a Suggestion

For the uninitiated, I highly, highly recommend Frederick J. Fisher, J.D., CCP’s masterpiece “The Dangers of Late Notice under Professional Liability Policies”. There are traps and pitfalls that policyholders obliviously walk into simply because they failed to comply with the reporting provision of their policy.

For our purposes I’ll point you to page 35’s section, “Denials Upheld for Reporting to the Wrong Person or Address”. There are real cases where the underwriter was aware of a situation, but the court determined that that did NOT satisfy the reporting requirement of the policy, and the claim denial for failure to report was upheld. Of particular note:

• Heritage Bank of Commerce v. Zurich Am. Ins. Co., 2022 U.S. Dist. LEXIS 150720 (N.D. Cal. Aug. 17, 2022)
  • Insured mentioned lawsuits in underwriting correspondence, but didn’t report to the claims department for 2 years. Coverage denied.
• Ironshore Specialty Ins. Co. v. Callister, No. 2:15-cv-00677, 2017 U.S. Dist. LEXIS 210973 (D. Utah Dec. 21, 2017)
  • Insured mentioned a claim in their renewal application. The court determined that that did NOT satisfy the notice provision.
• UnitedHealth Grp., Inc. v. Columbia Cas. Co., 941 F. Supp. 2d 1029 (D. Minn. 2013)
  • Here the broker TOLD the underwriter about the claim, but that did NOT satisfy the notice provision. Coverage denied.

Underwriters, You’re Doing Too Much

I appreciate the underwriters who pick up their phones when I call and try as best as they can to answer all of my questions. But for questions regarding specific situations that appear to be claims, asking an underwriter “Should I tell my policyholder to report?” is a fool’s errand. Even if the underwriter tells you not to worry about it, that’s not going to matter should the claim get denied when it’s reported later.

Picture a situation where your EPLI policyholder forwards you an email from a recently fired employee promising vengeance, fire and brimstone for daring to fire them. You call your underwriter. “Look, I don’t want my policyholder reporting a claim and it turns out to be nothing. Then we have this eternal stain on the loss runs. I’d rather forego that kind of a headache if we can. What do you think?” Let’s say your underwriter says, “Well, if they haven’t received a letter from the attorney, then I wouldn’t worry about it.”

Six months goes by, and your policyholder gets a demand letter from that aggrieved employee’s attorney. You report the claim right away. After the reservation of rights letter has been issued and the claims adjuster reviews everything, they’ve determined that the insured knew about the potential claim six months earlier and failed to comply with the clear and unambiguous notice provision of the policy. Claim denied.

“But my underwriter said…” is inadmissible, since the policy clearly and unambiguously says the policyholder cedes coverage by their failure to comply with the policy conditions. Your underwriter’s correspondence saying not to worry about it is worthless.

Brokers, stop asking your underwriters to help you navigate claims reporting. Even in the off chance you get them to affirm in writing that the policyholder need not report, that won’t help you in the event of a claim denial due to failure to report.

And underwriters, don’t answer these questions from your broker. You really need to put your foot down and advise your broker that they should read the clear and unambiguous wording of the policy to determine if they should report or not, and if any doubts should remain, they should report to the claims department post haste.

I know underwriters want to be helpful, and brokers don’t want their policyholder’s loss runs to be littered with claims that never went anywhere. But the alternative is far, far worse; claims getting denied simply for failing to report.

Meet the Author

Lucas Roberts

Management Liability Broker, Burns & Wilcox