KPFF, Inc. v. California Union Ins. Co

In KPFF, Inc. v. California Union Ins. Co. (1997) 56 Cal.App.4th 963, KPFF, a structural engineering firm, was insured under a "claims-made" professional liability policy. ( Id., at p. 967.) KPFF was sued for negligence, and the insurer provided a defense. ( Id., at p. 969.) During the policy period, an attorney for KPFF had written a letter to the insurer stating that he believed that another party was planning to file another action against KPFF. ( Id., at pp. 969-970.) After the policy period, such an action was in fact filed. The insurer refused to defend. ( Id., at pp. 970-971.) The appellate court held that the letter "did not constitute written notice from the insured within the meaning of the policy. . . . The insurer's chance receipt of information from third parties does not constitute an insuring event under a claims-made policy; the insuring event consists rather of reports and notices provided by the insured." ( KPFF, Inc. v. California Union Ins. Co., supra, 56 Cal.App.4th at pp. 976-977.) "Also, the attorney's letter set forth his subjective evaluation of the case based on his participation in the depositions and hearsay reports . . . . The letter did not indicate that any claim for seismic design deficiencies was or would be made. The attorney was careful to point out that he could not say if 'there is any substance to that report.' Reports based upon speculation or rumor do not rise to the level of notice of a claim under the awareness provision." ( Id., at p. 977.)