When a manufacture’s product caused harm to an infant, the manufacture failed in its claims against its insurer under a claims–made policy because passing on news articles about the event to the insurer did not constitute a “claim” under the policy.
A two-year-old infant swallowed small magnets known as “Buckyballs” which shredded his internal organs necessitating surgery and leading to a lifetime of disability. The insured saw an article about the event and the dangers posed by high power magnets and forwarded it, along with another article about another event involving its product to the primary insurer. They told the insurer that “News stories were reported online involving our products. All known information about the incident are included in the story. We have no additional information nor have been contacted directly regarding the incident.” The insurer responded reserving all rights, “including the right to deny coverage for this claim”. A demand was later sent by the child’s parents and forwarded to the insurers outside the policy period.
The court held that a claim relates to “a demand for money, property, or a legal remedy to which one asserts a right. It is a demand for something due or believed to be due”. The awareness of an alleged injury is not enough to constitute a claim. The fact that the media reports were forwarded the insurer was not a substitute for actually making a timely claim by the third party against the manufacture. As there was no claim against the manufacture during the policy period, there was no claim under the claims-made policy.
