Harvard College and Zurich American Insurance Company have been embroiled in an insurance coverage dispute for over a year regarding Zurich’s obligation to cover Harvard’s hefty defense bills incurred defending its affirmative action admissions policy, which is presently before the U.S. Supreme Court. Last week, the world-renowned university told a District of Massachusetts court that it should deny Zurich’s motion for summary judgment because questions of fact remain unresolved. Harvard also accused Zurich of inappropriate discovery gamesmanship by withholding documents and information. 

In 2014, Harvard was sued by an organization claiming Harvard’s admissions policies violated Title VI of the Civil Rights Act. The Department of Justice joined the fray in 2017 when it informed Harvard that it was opening an investigation into the school’s admissions process. Harvard tendered its defense of the action and investigation to its primary insurer, AIG, who accepted coverage for the claim. After Harvard burned through a $2.5 million retention and $25 million in coverage provided by the AIG policy, Harvard turned to Zurich, its excess insurer. But Zurich denied coverage, claiming Harvard failed to comply with the technical notice requirements of the claims-made policy, which required formal notice during the 2014 policy period. 

Harvard sued Zurich in September 2021 seeking to enforce the insurer’s obligation to pay the $15 million available under the policy. During the course of discovery, Zurich produced numerous documents confirming that the carrier had both actual and constructive knowledge of the claim.

Zurich nonetheless moved for summary judgment, asking the court to decide that Harvard’s failure to comply with the policy’s technical notice requirements precluded coverage. Harvard fired back in its opposition that technical compliance is unnecessary when the purpose of compliance—notice—is satisfied through other means. Harvard pointed out that an essential purpose of a notice requirement in a claims-made policy is to allow the insurer to set premiums for subsequent policy periods, and Zurich knew of the claim when underwriting later policies. Harvard further maintained that Zurich may not feign ignorance to avoid its contractual obligations. 

Harvard accuses Zurich of playing games in discovery and refusing to hand over documents establishing its actual knowledge. The school claims that, at a minimum, it is entitled to those materials and a resolution of the factual issues surrounding Zurich’s actual knowledge before the court rules on Zurich’s summary judgment motion. 

Harvard’s dispute with Zurich should serve as a stark reminder to policyholders that notice should be liberally provided to claims-made insurers, particularly where a tower of coverage is involved. Indeed, notice can be provided before a formal claim is even made. Virtually all claims-made policies allow for a “notice of circumstances”—the ability to advise the carrier of a matter that is likely to materialize into a claim in the future. Providing such prospective notice operates as a placeholder, and assures that any future claim (no matter when asserted against the policyholder) will relate back to when the notice of circumstances was provided. Had Harvard provided such notice to Zurich in 2014, it would have likely avoided the dispute with its insurer altogether. While hindsight is always clearer than foresight, insurance policyholders should proactively consider how notice provisions can be used to their advantage to avoid future coverage disputes.