Having been awarded more than $900,000 for a contractor’s faulty workmanship, a building owner sued to collect that judgment from the contractor’s liability insurer. But the relevant policy covered only claims reported to the insurer during the policy period, and that policy expired 19 months before the insurer learned about the building owner’s claim. The district court properly denied the building owner’s claim that it may nonetheless recover on the policy because, pursuant to Code § 38.2-2226, the insurer waived certain defenses by failing to promptly provide notice of its coverage denial.
The building owner’s effort to shoehorn this dispute into § 38.2-2226 misconstrues the insurance contract at issue. Under the insurer’s claims-made-and-reported policy, the act triggering coverage was not the owner’s 2014 demand for the judgment, but rather the communication of that claim to the insurer, which didn’t happen until well after the policy expired.
This case might come out quite differently had the insured contractor reported the owner’s demand in 2014 or bought an occurrence policy. But here, the insured bought a claims-made-and-reported policy and reported no claim during the policy period. It didn’t “breach” the policy by not reporting the 2014 demand any more than one breaches a fire insurance policy by incurring damage from a flood.
Accordingly, § 38.2-2226 does not apply to the insurer’s denial of coverage, and summary judgment was therefore proper.