Did You Call the Carriers?

Buckle up, this one is a ride. So as you are likely aware, the Supreme Court recently ruled against Harvard regarding use of affirmative action in college admissions. While a massive decision with significant implications, that’s not at issue here. What’s at issue is the bill.

Here comes the context:

Marsh is Harvard’s insurance broker. They also administer Harvard’s Errors & Omissions program —— which features multiple layers of insurance. Without giving a big lesson on insurance law (although we really, really want to), let’s use the example of a tower.

  1. The bottom floor with the door is Harvard, which is $2.5M directly from them (self-insured layer);
  2. The next floor up is AIG, which is a $25M dollar policy of insurance (the primary layer);
  3. The floor above that is Zurich, which is a $10M dollar policy of insurance (first excess layer).
  4. There is another floor above them, but we’re not sure what the amount of insurance limits are (second excess layer).

This, but insurance.

Like a tower, you can’t go up a floor unless you reach the stairs or elevator. That said, there are a number of rules you have to follow in order to get to that next floor. One is letting everyone know that you need to climb the tower.

That’s what’s being alleged here. The excess layers weren’t given a heads up (tendered the claim) until 2017, 3years after the lawsuit began. That’s called a reporting defense and resulted in Zurich not letting Harvard get to their tower floor.

After attempting to sue the carriers to establish that there was coverage (they could go to their floor) and losing, Harvard is now going after Marsh for failing to put everyone on notice (like they did with AIG).

The verdict:

If your insurance broker is the one that notifies your insurance carriers of claims, make sure everyone who needs to be put on notice is on notice. From there, it’s probably wise to confirm that everyone is aware. Double, triple, quadruple check if you have to.

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