It Ends with Late Notice

Justin Baldoni, his companies associated with the motive It Ends with Us, and certain executives of those companies (the “Baldoni Entities”) are yet again defendants in a lawsuit, this time with their Management Liability insurer Harco National Insurance Company (“Harco”), involving Blake Lively’s sexual harassment claims (“Lively Lawsuit”). Harco filed suit against the Baldoni Entities seeking a declaration that it does not owe them insurance coverage for the Lively Lawsuit two Management Liability Policies.[1]

Harco’s Denial of Coverage to the Baldoni Entities Under Their Management Liability Policies

Harco alleges the Baldoni Entities were aware of Blake Lively’s allegations as early as April 2023, prior to the effective date of the two implicated Management Liability Policies. It further alleges the Baldoni Entities warranted in their 2023 application for coverage that “no person or entity for whom the insurance is intended has any knowledge or information of any act, error, omission, fact or circumstances which may give rise to a claim which may fall within the Employment Practices Liability coverage if issued by Harco” and that the Baldoni Entities “circled ‘no’ in response to the specific request in the 2024 application that it disclose whether there is any claim, notice of potential claim or any situation that may give rise to a claim within the past 12 months.”[2] Harco, based on these facts and the policy language referenced below, denied coverage to the Baldoni Entities for their claim made on April 25, 2025 for the Lively Lawsuit and then filed suit seeking a declaration affirming its denial of coverage.

First, the Management Liability Policies contain various claims-made coverage grants, including Directors & Officers coverage and Employment Practices Liability coverage. Both coverage grants “provide coverage for Claims for a Wrongful Act that are ‘first made’ against the Insureds during the Policy Period.”[3] The coverage is only provided for covered claims that are first made against the insured during the policy period, meaning, if a claim is made against an insured prior to the policy period then there is no coverage for that claim.

Next, the Management Liability Policies require that not only the claim be made against the insured during the relevant policy period but the insured must also report the claim to the insurer within ninety (90) days after the expiration of the policy.[4] This requirement is further confirmed through the Management Liability Policies’ “Prior Knowledge Exclusions,” contained in the Management Liability Policies’ applications and incorporated via Section IX. Of the “GTC” of the Management Liability Policies, excluding coverage for claims known to the insured prior to the time of signing the application for coverage when the insured did not include the information within the application.[5]

Lessons Learned from Harco’s Denial and Steps Insureds Can Take to Prevent Coverage Denials Based on Late Notice

Harco’s denial of coverage demonstrates to all insureds the importance of adequately completing applications for insurance and the need to put claims-made polices on notice of circumstances of potential claims and actual claims early and often.

Insurers rely upon insurance applications and associated documentation during the underwriting process. Because of this, the accuracy and completeness of these documents is essential to coverage. Insureds are therefore advised to perform the necessary due diligence to adequately complete applications for insurance. Harco’s denial of coverage is partially based on the Baldoni Entities’ failure to adequately complete its application for coverage for the operative insurance policies. This may have been prevented if the Baldoni Entities had performed due diligence and included references to Blake Lively’s allegations of sexual harassment and “serious HR problems on set” first made in April of 2023.

Notice to insurers of notice of circumstances and claims is of equal importance. Once an insured becomes aware of a notice of circumstances that may give rise to a claim, or a claim itself, it should promptly provide notice to its insurers under any potentially applicable insurance policy. If the Baldoni Entities had provided notice to Harco of Blake Lively’s allegations of sexual harassment and “serious HR problems on set” when she originally made them in April of 2023, then, presumably, Harco would not have denied coverage for the Lively Lawsuit based on the Baldoni Entities’ purported late notice.

Insurance policies require notice of claims or circumstances that may give rise to a claim based on the insured’s knowledge. Policies may include a “knowledge of occurrence,” or similar provision, stating the titles of those employees who must have knowledge to trigger the policy’s notice provision. It is important to be aware of the roles identified in this provision to ensure compliance with the policy’s notice provision. Additionally, if the current policy language is overly broad, it should be amended to include only those roles responsible for reporting claims.

A denial of coverage based on late notice is not only frustrating but avoidable. Please reach out to Anna Perry at aperry@sdvlaw.com for advice on the information necessary to adequately complete an application for insurance, putting an insurer on notice for a claim or notice of circumstance, and advice on amending an insurance policy’s notice provisions.

[5] Compl. At ¶¶ 78 & 86, Harco National Ins. Co. v. Wayfarer Studios, LLC, et. al., No. 1:25-cv-5949 (S.D.N.Y. July 21, 2025).