Attorney Joseph Scuderi, of Scuderi Law Offices in Olympia, is representing Baker and said PCIC had "a very unusual" policy that made it appear as though the contractor had a proper insurance policy.

The court agreed with Cox and Baker's argument that Chapter 18.27 RCW establishes a public policy of ensuring contractors are financially responsible, primarily through insurance, for losses caused by their negligence. The statute requires contractors to have insurance or financial responsibility to cover $100,000 "for injury or damage including death to any one person" to obtain registration with the state.

While RCW 18.27.050 does not require occurrence policies or retroactive coverage for contractors, the Supreme Court said insurers should not issue policies that essentially cause contractors to default on their statutorily mandated financial responsibility.

PLIC had issued two, similar nonretroactive claims-made policies to Baker from Jan. 5, 2019, to Jan. 5, 2020, known as the 2019 policy, and from Jan. 5, 2020, to Jan. 5, 2021, known as the 2020 policy.

The court said the insuring agreement between the parties more similarly resembled an occurrence policy, as the coverage extended to bodily injury and property damage only if it occurred during the provided policy period.

The claims-made features of the policy were added later and applied only to claims "first made against the insured and reported to [PCIC] in writing during the policy period."

Because Mr. Cox's death occurred in October 2019 and Cox did not notify Baker of her intent to sue until September 2020, the occurrence and reporting dates did not occur in the same policy period. PLIC did deny coverage of the claim initially in October 2020, but it agreed to defend Baker under a reservation of rights.

The 2019 policy did not cover the claim because it was not reported within the policy period, and the 2020 policy did not provide coverage because the occurrence the claim arose from happened before the policy period began on Jan. 5, 2020, the opinion said.

While no courts in the state of Washington have determined the enforceability of nonretroactive claims-made policies, the high court took guidance from a 1985 decision by the New Jersey Supreme Court in Sparks v. St. Paul Insurance Co.

The New Jersey high court said nonretroactive claims-made policies "combine[] the worst features of 'occurrence' and 'claims made' policies and the best of neither" by providing neither retroactive nor prospective coverage found in those policies and noted that the nature of the error and reporting period would have sufficient time to file a claim.

The New Jersey Supreme Court concluded the provisions in the nonretroactive policy limiting recovery to those claims occurring and reported within the policy period were unenforceable on the basis of public policy, similar to the Washington Supreme Court's eventual conclusion.

Scuderi said that, since the policy has been deemed unenforceable, the case will now return to federal court to determine how to handle Cox's wrongful death claim.

"The insurance policies PCIC issued to Baker fail to provide prospective or retroactive coverage and create limited one-year windows for claims to occur and be reported to qualify for coverage," Justice Susan Owens wrote for the panel. "Such restrictive coverage violates Washington's public policy. Therefore, we answer the certified question in the affirmative."

Attorneys Jeremey Donn Dobbins, Kevin Hochhalter, Darrell L. Cochran, Kevin Michael Hastings and Christopher Eric Love also represented the defendants.

Attorney Daniel L. Syhre, of Betts, Patterson & Mines in Seattle, represented PCIC and did not return a request for comment.