McCollum v. Continental Casualty Company
In McCollum v. Continental Casualty Company, 151 Ariz. 492, 493, 728 P.2d 1242, 1243 (App. 1986), a chiropractor completed an application for malpractice insurance, which included coverage for prior acts.
The effective date of the insurance policy was the date the application was submitted, pending approval by the carrier. Id.
After the chiropractor mailed his application and his first premium check to the insurance company, but prior to carrier approval, he was sued for malpractice. Id.
The insurance company argued that the chiropractor had a duty to disclose the lawsuit, and his failure to do so precluded his receipt of insurance coverage. Id. at 494, 728 P.2d at 1244.
The Court disagreed based on the predated policy rule.
"When an insurer agrees to predate a policy and accepts a premium payment for the period between the date of application and the date of issuance, then that insurer has assumed the risk of any intervening loss." Id.
The Court concluded that "an insured is covered under a predated policy of insurance which becomes effective on the date he submits his application and tenders his premium payment." Id. at 495, 728 P.2d at 1245.