The “First Made” Requirement in Claims-Made Coverage

Claims-made policies almost always require the claim be “first made” during the policy period.

Such policies also usually include a related-acts provision. A related-acts provision “refers to any provision in an insurance policy which groups together otherwise distinct claims which have been deemed to be ‘related’ or ‘interrelated.’ ” John Zulkey, Related Acts Provisions: Patterns Amidst the Chaos, 50 Val. U. L. Rev. 3, at 633 (Spring 2016). Such a provision is sometimes also called a “deemer clause” or “single claim” provision because all related claims are deemed a single claim made as of the earliest one. See Beaufort Cty. Sch. Dist. v. United Nat. Ins. Co., 709 S.E.2d 85, 92 (S.C. App. 2011) (calling it a “deemer clause”); In re Feature Realty Litig., 468 F. Supp. 2d 1287, 1301 (E.D. Wash. 2006) (same); Worthington Fed. Bank v. Everest Nat. Ins. Co., 110 F. Supp. 3d 1211, 1225–26 (N.D. Ala. 2015) (referring to it as a “single claim” provision).

Both the “first made” phrase and related-acts provision implicitly recognize the possibility that multiple claims may arise from an incident, such as a demand letter followed by a complaint, both of which qualify as a claim as typically defined. See Westrec Marina Mgmt., Inc. v. Arrowood Indem. Co., 163 Cal. App. 4th 1387, 1394-95, 78 Cal. Rptr. 3d 264, 270 (2008) (“The references to claims ‘first made’ (italics added) suggest that the same claim can be made more than once. This suggests that two events each constituting a claim under the policy definition, such as ‘a written demand for civil damages or other relief’ followed by ‘a civil proceeding commenced by the service of a complaint or similar pleading,’ can constitute a single claim made more than once.”); Lodgenet Entertainment Corp. v. American Int’l Specialty Lines Ins. Co., 299 F. Supp. 2d 987, 992 (D.S.D. 2003) (noting that policy language suggests insurer “contemplated that there would be multiple ‘Claims’ which could arise from the same set of facts”); National Union Fire Ins. Co. v. Zillow, Inc., 2020 WL 774366, *2 (9th Cir.) (memorandum decision) (“In particular, the Policy’s use of the term ‘Claims first made’ suggests that–under circumstances unclear from the language of the Policy–a Claim made against Zillow might be the reassertion of a prior unreported Claim. A contrary conclusion would render superfluous the Policy’s use of the word ‘first.’ ”).

The first instance of the claim (e.g., the demand letter) falls under the policy in place at the time; subsequent iterations of the claim (e.g., the follow-on complaint) are generally treated as an extension or continuation of the original claim relating back to it. See ITC Investments, Inc. v. Employees Reinsurance Corp., 2000 WL 1996233, at *8 (Sup. Ct. Conn. 2000) (discussing “relation back” approach). The coverage fate of the subsequent claim turns on that of the original claim. If, for example, the demand letter is not covered for lack of tender, then neither is the follow-on complaint. In other words, the repetition of an earlier non-covered claim in another form at another time does not create a new opportunity for coverage. See, e.g., Community Found for Jewish Educ. v. Fed. Ins. Co., 16 F. App’x 462, 466 (7th Cir. 2001) (“once that first claim is made, subsequent variations of the same claim do not qualify as new claims”); Westrec Marina Mgmt., Inc. v. Arrowood Indem. Co., 163 Cal. App. 4th 1387, 1394-95, 78 Cal. Rptr. 3d 264, 270 (2008) (“The Clark lawsuit and the Adams letter constituted a single claim that was first made at the time of the Adams letter, as we have stated. Westrec received the Adams letter during the first policy period but failed to notify Arrowood of the claim within 30 days after the expiration of the policy, as required. Westrec’s subsequent notice of the lawsuit during the second policy period concerned the same claim and therefore was untimely.”); Seneca Ins. Co. v. Kemper Ins. Co., 2004 WL1145830, at *4 (S.D.N.Y. 2004) (holding antitrust complaint not covered because claim was “first made” year before on another insurer’s watch by way of a demand letter); Pizzini v. American Int’l Specialty Lines Ins. Co., 210 F. Supp. 2d 658, 671 (E.D. Pa. 2002) (“Whether the August 30, 1995 demand letter merely notified Shellington of the claim of the Pizzini-Bache plaintiffs or was itself a ‘claim,’ this claim was ‘first made’ against Shellington on the date he received their August 1995 demand letter.”); Berry v. St. Paul Fire & Marine Ins. Co., 70 F.3d 981, 983 (8th Cir. 1995) (holding policy-period lawsuit not covered based on pre-policy demand letter); Direct Gen. Ins. Co. v. Houston Cas. Co., 139 F. Supp. 3d 1306, 1315 (S.D. Fla. 2015) (same), aff’d sub nom. Direct Gen. Ins. Co. v. Indian Harbor Ins. Co., 661 F. App’x 980 (11th Cir. 2016); Westrec Marina Mgmt., Inc. v. Arrowood Indem. Co., 163 Cal. App. 4th 1387, 1396, 78 Cal. Rptr. 3d 264, 271 (2008) (same).

Conversely, if the earlier claim was covered, there will normally be coverage for the subsequent claim, not under the current policy, but under the old policy as an extension or continuation of the earlier claim.

Some courts have reached this conclusion based on the “first made” phrase alone. See ITC Investments, 2000 WL 1996233, *8 (“Could it seriously be argued that if a policy application just contained the word ‘claim’ and a prior act endorsement also just used the word ‘claims,’ the insured might be led to think he or she could advance the same claim in one policy period and then if the claim was made again by a subsequent letter or by way of suit in a second policy period there would be coverage under the second policy as well?”); International Ins. Co. v. Peabody Intern. Corp., 747 F. Supp. 477, 480 (N.D. Ill. 2000) (holding no coverage for arbitration because of demand letter received before policy inception based on “first made” phrase alone); National Cas. Co. v. Great Southwest Fire Ins. Co., 833 P.2d 741, 744 (Colo. 1992) (same for wrongful termination suit based on pre-policy letter from plaintiff asserting she should not have been fired).

Other courts, however, view the “first made” phrase, by itself, as too cryptic to conclude that repetition of an earlier pre-policy claim is not covered. See Lodgenet Entertainment Corp. v. American Int’l Specialty Lines Ins. Co., 299 F. Supp. 2d 987, 994 (D.S.D. 2003) (holding complaint following unreported EEOC charge in prior policy year covered because policy did not include related-acts provision); Zillow, Inc., 2020 WL 774366, *2 (applying Washington law) (finding “first made” phrase ambiguous without accompanying related-acts provision and remanding case for district court to consider extrinsic evidence in the hope of resolving the ambiguity).

The “first made” phrase coupled with the related-acts provision essentially collapses the subsequent claim into the original related one. See, e.g., Weaver v. Axis Surplus Ins. Co., No., 2014 WL 5500667, at *15 (E.D.N.Y. 2014), aff’d, 639 F. App’x 764 (2d Cir. 2016) (holding, based on “first made” phrase in insuring clause together with related-acts provision, that indictment was not covered because it was preceded by a demand letter years beforehand); Beaufort Cty. Sch. Dist. v. United Nat. Ins. Co., 709 S.E.2d 85, 92 (S.C. App. 2011); Westrec Marina Mgmt., Inc. v. Arrowood Indem. Co., 163 Cal. App. 4th 1387, 1394-95, 78 Cal. Rptr. 3d 264, 270 (2008).

Besides a complaint following a demand letter, another example is a complaint following a pre-policy administrative proceeding. See, e.g., American Ctr. for Int’l Labor Solidarity v. Fed. Ins. Co., 518 F. Supp. 2d 163, 173 (D.D.C. 2007), aff’d, 548 F.3d 1103 (D.C. Cir. 2008) (holding no coverage for employment discrimination lawsuit that was a progression of an earlier pre-policy EEOC charge that qualified as a claim, was not timely reported, and hence not covered); Cracker Barrel County Store, Inc. v. Cincinnati Ins. Co., 499 Fed. Appx. 559, 567-78 (6th Cir. 2012) (same); but see Bensalem Twp. v. W. World Ins. Co., 609 F. Supp. 1343, 1349 (E.D. Pa. 1985) (holding that pre-policy EEOC letter did not qualify as a claim and hence age discrimination lawsuit filed within policy period was covered); Lodgenet Entertainment Corp. v. American Int’l Specialty Lines Ins. Co., 299 F. Supp. 2d 987, 994 (D.S.D. 2003) (holding complaint following unreported EEOC charge in prior policy year covered because policy did not include related-acts provision).

A final example is an amended complaint following the original one. See Community. Found. For Jewish Educ. v. Fed. Ins. Co., 16 F. App’x 462, 466 (7th Cir. 2001) (“Thus, the amended complaints are not claims first made within the Policy period. A plain reading of the contract language precludes finding that amendments to a complaint made against the insured could commence a ‘civil proceeding’ which had already been commenced by the filing and service of a complaint. Otherwise the same lawsuit against the insured would qualify as two different civil proceedings, one which was ‘first made’ before the Policy period began and one which commenced after the Policy was signed.”); Great American Ins. Co. v. Sea Shepard Conservation Society, 2014 WL 2170297, *7 (W.D. Wash. 2014) (“Courts consistently hold that the addition of new causes of action in a civil proceeding, ordinarily through an amended complaint, does not give rise to a new Claim.”); National Union Fire Ins. Co. of Pittsburgh, PA v. Willis, 296 F.3d 336, 342 (5th Cir. 2002) (“We conclude, therefore, nothing in the record supports Willis’ contention that the negligent misrepresentation claim set forth in the fourth amended complaint gives rise to a new theory of recovery that is a separate claim governed by the 2000 policy.”); Informix v. Lloyd’s of London, 1992 WL 469802, at *2 (E.D.N.Y. 1992) (declining to construe amended complaint as new claim); but see Checkrite Ltd., Inc. v. Illinois Nat. Ins. Co., 95 F. Supp. 2d 180, 190 (S.D.N.Y. 2000) (holding amended class action complaint constituted new claim because it added “a new and distinct group of claimants”).