Court Opinion

ID: 5165321
Source: CourtListenerOpinion
Date Created: 2022-01-02 03:28:12.7723+00
Date Added: 2024-06-11T08:23:20.535227
License: Public Domain

Justice ERICKSON
specially concurring in the result:
I specially concur in the reversal of the court of appeals, but for reasons that differ in some respects from those set forth in the majority opinion. I agree with the majority that the court of appeals erred in deciding the insurance contract was unambiguous. I would hold the insurance contracts between the physicians and PHICO Insurance Company (PHICO) were continuous contracts breached by PHICO.
I
A civil action was commenced by 105 “independent physicians” against PHICO for damages based on fraud, breach of contract, negligent misrepresentation, bad faith, and interference with contract and prospective business opportunities.1
The controversy centers on PHICO’s sale and subsequent termination of a “Physicians Professional Liability Policy” that provided “claims-made” coverage to the plaintiff-physicians.2 Upon termination of the liability policy, a doctor would have coverage for incidents occurring during the policy period but not reported as claims until after the date of termination only if he or she purchased reporting period (tail) coverage. PHICO of*1365fered tail coverage based upon a percentage of the fourth-year “mature rate.”3
The parties tried this case to the court. Following a six week trial, the trial judge entered a 294 page order on September 5, 1989, containing findings of fact, conclusions of law, and a judgment for the plaintiff-physicians. The court of appeals reversed the trial court and found for the defendant, PHICO.
We granted certiorari to review the decision of the court of appeals in Ballow v. PHICO Insurance Co., 841 P.2d 344 (Colo.App.1992).
II
PHICO is owned by the Hospital Association of Pennsylvania and was established in Pennsylvania in 1976 to insure Pennsylvania hospitals and physicians employed by local hospitals. Although PHICO primarily insured hospitals, in 1978 it decided to expand its business to include insuring independent physicians. In 1979, PHICO wrote its first independent physician policy in Pennsylvania. PHICO was licensed to do business in Colorado on March 25, 1980, and began marketing a policy in Colorado in the spring of 1981.
The first PHICO independent physician policy was sold in Colorado on February 1, 1982. By November 1, 1984, PHICO had ceased accepting new independent physician business but continued to write new policies for hospitals. In 1985, PHICO established a plan to reduce the number of independent physicians insured but maintained its stance that it would continue to insure the doctors already receiving coverage. Also in 1985, PHICO increased the percentage of the fourth-year mature rate required to buy a tail policy. On June 18, 1986, PHICO decided not to renew any of the independent physician business. On July 12, 1986, PHI-CO sent a letter to its insured independent physicians providing notice of its decision to withdraw from the Colorado market. Most of the doctors had a renewal date of July or earlier so they had already renewed when they were informed of the withdrawal and the increased cost to purchase a tail policy.
Ill
In order to determine if the insurance policy provided by PHICO to the independent physicians was breached by PHICO, it is first necessary to analyze the type of policy written by PHICO and the purpose behind this type of liability policy. I would not interpret the contract in favor of the insureds and then find a breach, as the majority does, but would address the nature of the policy and conclude that there was a purpose and intent shared by both parties and that a breach occurred. The examination of the type of policy written by PHICO yields essential insight into why this type of policy must be treated as a continuous policy.
A. Types of Medical Malpractice Coverage
As the majority points out, there are two general types of medical malpractice insurance available to individual doctors — “occurrence” and “claims-made.” Generally, “[a]n ‘occurrence’ policy protects the policyholder from • liability for any act done while the policy is in effect, whereas a ‘claims-made’ policy protects the holder only against claims made during the life of the policy.” St. Paul Fire & Marine Ins. Co. v. Barry, 438 U.S. 531, 535 n. 3, 98 S.Ct. 2923, 2926 n. 3, 57 L.Ed.2d 932 (1978). The act which triggers coverage under an occurrence policy is the act or omission itself — -if the liability inducing event occurs during the policy period, the insured is indemnified regardless of when the claim is brought. Conversely, the act which determines coverage under a claims-made insurance policy is the assertion of the claim during the policy period. One type of claims-*1366made policy provides coverage for claims made during the policy period no matter when the alleged act or omission occurred.4 See Mutual Fire, Marine & Inland Ins. Co. v. Vollmer, 306 Md. 243, 508 A.2d 130, 134-35 (1986) (stating that claims-made policies provide indemnity during the policy term no matter when the alleged error or omission or act of negligence occurred); Stine v. Continental Cas. Co., 419 Mich. 89, 349 N.W.2d 127, 130 (1984) (same). See also Gereboff v. Home Indem. Co., 119 R.I. 814, 383 A.2d 1024 (R.I.1978) (involving a policy written to cover all claims made during the policy period regardless of when the event giving rise to the liability claim occurred). An insurer may modify a claims-made policy and limit coverage only to a certain range of occurrences by creating a “retroactive date.” All events that occur prior to the retroactive date are outside the scope of coverage even if the claim is made while the policy is in force.5
Some insurers offer policies that have a retroactive date identical to the beginning of the coverage with the insurer. This type of policy is a combination of claims-made and occurrence policies. This type of claims-made coverage (hybrid claims-made policy) covers negligent acts or omissions which occur and are the subject of a claim during the policy period.6 See Stine, 349 N.W.2d at 134 (involving a policy written to cover only claims which are made and occur within' the policy period).
From the standpoint of the insured, hybrid claims-made policies contain the worst characteristics of both claims-made and occurrence policies, and the best of neither. Hybrid claims-made policies provide neither the prospective protection of an occurrence policy nor the retroactive coverage of a claims-made policy with no retroactive limit. Prospective or retroactive coverage must be purchased to supplement the hybrid claims-made coverage in this case.7 The distinction *1367is critical to the analysis inasmuch as the type of coverage in this case is both occurrence and claims-made and emphasizes the essential purpose behind the coverage offered by PHICO. The insurance policies purchased by the physicians in this case were hybrid claims-made policies.8
B. The Rationale of Claims-Made Policies
Claims-made policies are a fairly recent development and were created primarily in response to situations in which the event or occurrence giving rise to liability is difficult to pinpoint. Vollmer, 508 A.2d at 135. Occurrence policies were inadequate instruments with which to deal with the long and open “tail” exposure presented by an extended or undefined liability-inducing event. Donald S. Malecki & Arthur L. Flitner, Commercial General Liability: Claims-made and Occurrence Forms 12 (3d ed. 1990). Claims-made policies allow underwriters to define them exposure and accurately set premiums and reserves. The accuracy is the result of the insurer’s ability to limit liability to claims actually made during the term of the policy for which the premium is computed. Vollmer, 508 A.2d at 135. “As a result, the insurer is better able to predict the limits of its exposure and more accurately estimate the premium rate schedule necessary to accommodate the risk undertaken.” Stine, 349 N.W.2d at 131. Hybrid claims-made policies further restrict the exposure of insurance carriers by limiting the coverage to occurrences and claims made during the policy period.
When an insured’s coverage under a claims-made policy is terminated, or not renewed, the insured may purchase coverage for claims that arose during the policy period but were subsequently asserted. The subsequent coverage is called a “tail policy” or “retroactive reporting coverage” and in effect converts a claims-made policy into an occurrence policy. The tail policy provides coverage for all acts and omissions during the period of continuous coverage with the claims-made carrier, regardless of when the claim is reported in the future.9 An alternative to tail coverage, where available, is “pri- or acts” coverage. A prior acts policy is essentially tail coverage offered by the subsequent carrier.10
C. The Rationale of Hybrid Claims-Made Policies
Hybrid claims-made policies are marketable despite their shortcomings because they reduce the insured’s premiums in the first several years. Statistics show that only a small percentage of claims that arise within the policy period are reported in the first year of coverage. Therefore, the insurance companies charge lower premiums for the first year. In the second year of coverage, a hybrid claims-made policy covers all claims reported during the second year that occurred either in the first or second year. Therefore, the second-year premium is higher than the first-year premium. The third year of coverage encompasses all claims reported in the third year that occurred during the first, second, and third years. The fourth-year rate, also known as the “mature *1368rate,” levels out because statistics show most claims arising out of the prior years will be reported within the first four years. Such policies are attractive because the insureds realize significant premium savings in the early years.11
The physicians in this case purchased hybrid claims-made policies and tail options with the belief they would realize savings over several years and would be covered when they terminated their policies. The underwriters sold the hybrid claims-made and tail policies to enable them to limit their exposure and to accurately set reserves and compute premiums. The character of the policies at issue in this case shows the shared intent of both parties to enter a long-term hybrid claims-made insurance contract.
D. The Hybrid Claims-Made Policy Is Ambiguous
An insurance policy is a contract and the standard rules of contract construction apply. Republic Ins. Co. v. Jernigan, 753 P.2d 229, 232 (Colo.1988). Insurance contracts are to be interpreted and read according to the terms of the policy. A contract is ambiguous only if it is reasonably and fairly susceptible of more than one meaning. Terranova v. State Farm Mut. Auto. Ins. Co., 800 P.2d 58, 60 (Colo.1990). A mere disagreement between the parties does not create ambiguity. Id. When a contract is ambiguous, extrinsic evidence may be admitted to clarify the meaning of the terms and to ascertain the parties intentions. Kuta v. Joint Dist. No. 50(J), 799 P.2d 379, 382 (Colo.1990); Pepcol Mfg. Co. v. Denver Union Corp., 687 P.2d 1310, 1314 (Colo.1984).
As the majority points out, the terms in the declaration and endorsements create a conflict and make the contract ambiguous. The declaration indicated that each year was a separate and distinct policy year, while the endorsements suggest a continuous policy. The trial court found the contract to be ambiguous:
The obvious conflict here is between the declarations of the policy, which clearly establish a one-year period of the policy, and the endorsements, which equally clearly establish a percentage rate and a method of calculation which extends into the future.
Because an insurance policy and an endorsement are considered a single instrument, Martinez v. Hawkeye-Security Insurance Co., 195 Colo. 184, 576 P.2d 1017 (1978), the policy is ambiguous as to whether the insured has one continuous policy or several year-long policies.12
Ambiguity in a contract should first be resolved by attempting to give effect to the intent of the parties.13 See Martinez v. Continental Enterprises, 730 P.2d 308 (Colo.1986); Pepcol Mfg. Co., 687 P.2d at 1313; Spillane v. U.S. Fidelity & Guaranty Co., 137 Colo. 385, 325 P.2d 700, 704 (1958) (stating in seeking to determine the legal effect of a policy, the court should endeavor to determine what the parties had in mind at the time of procuring the insurance policy); see also Massachusetts Bonding & Ins. Co. v. Board of County Comm’rs, 100 Colo. 398, 68 P.2d 555 (1937) (holding whether a renewal of an insurance contract creates a new and independent contract or a continuation of the original contract depends on the intent of the parties). In my view, it is not necessary to reach the conclusion that an ambiguous contract is construed against the drafting insurer. While it is true that ambiguous contract terms must be read in favor of the insured, Republic Insurance Co., 753 P.2d at 232, whether the renewal of an insurance contract creates a new and independent contract or a continuation of the original contract depends upon the intent of the parties. Massachu*1369setts Bonding & Ins. Co., 100 Colo. at 399, 68 P.2d at 556; see also 18 George J. Couch, Cyclopedia of Insurance Laiv § 68.40 (2d rev. ed. 1983) (footnotes omitted) (“Whether the renewal of a policy constitutes a new and independent contract or continuation of the original contract primarily depends upon the intention of the parties as ascertained from the instrument itself.”).
In this case, the evidence supports the trial court’s finding that the parties intended the hybrid claims-made policy to be a continuous policy.14 The trial court stated:
Thus, the Court must determine whether the intention of the parties was that the successive renewals of the PHICO policy were a continuation of a single contract such that PHICO was bound by the express terms of the original policy, or whether these were separate and distinct contracts of insurance subject to unilateral modification at the time of renewal with notice to the insured.... Accordingly, the Court has considered the marketing literature and oral and written representations made by PHICO and its agents, and relied upon by physicians, in construing the intent of the parties.
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... [T]he Court finds the intent of the parties was to create a contract which would bind the parties to the tail percentages denoted in the original endorsement. This result is amply buttressed by a review of the evidence adduced from the advertising literature and the testimony of the parties themselves.
The purpose and the language of the policy, as well as the tail policy provisions, indicate that the intent of the parties was to create a continuous policy.
In addition, the purpose behind buying and selling the liability insurance reflects that the parties intended the hybrid claims-made policy to be continuous. The hybrid claims-made policies provide coverage over a number of years at a rate substantially discounted over the first several years. The policies provide a savings to the insured and limit and define exposure of the insurer. If the policies are not continuous and do not reach maturation, they do not serve their purpose to the insured. While the hybrid claims-made policy is sold on an annual basis, there is a sequential or cumulative effect from year to year in terms of risk assumed, the cost of that risk, and the cost of a tail policy for the extension of coverage. The underwriters compute the exposure over the years to maturation and establish the premiums and tail rates accordingly. The trial court found:
[A] review of the testimony of the 105 plaintiffs reveals tellingly that each doctor was under the impression, in fact had been led to believe, that the tail percentage was “fixed,” “poured in concrete,” etc. The evidence is clear that the endorsement was propounded by the defendant to calm fears and allow the insureds to avoid the many pitfalls of a new and relatively unusual type of insurance coverage.
The insurers then market the hybrid claims-made policies as a substantial savings over time. The physicians intended the contract to protect them over a period of years, and PHICO offered long-term coverage so that it could assume a calculated risk over the same period.
The language of the policy also suggests a continuing contract. The policy itself encompasses all prior years and covers a “medical incident occurring during the policy period” for the purposes of defining when an occurrence is covered under the policy.15 The retroactive date is set from the first day of the insurance coverage with PHICO, not at *1370the beginning of each year, thereby providing coverage for occurrences and claims made during coverage by PHICO. If the “policy period” is only one-year, then the hybrid claims-made coverage under the policy does not extend to prior years of claims-made coverage. Under a single-year construction, a “medical incident” occurring in year two of the claims-made policy coverage would not be covered if reported during year three of claims-made coverage. This construction would defeat the entire purpose of obtaining claims-made malpractice insurance.
Finally, the tail policy provisions indicate the intent of the parties to create a continuous policy. The tail policy rate was a one time charge contingent on the year in which the policy was terminated, or not renewed, and measured against the fourth-year mature rate. The rate was specified with respect to which year the insured left and not stated merely as a percentage if the tail policy was purchased at the end of a specific contract year.16 The trial court found, by examining a 1983 letter from a PHICO agent to a physician’s group:
The tail charge needs to be paid if you move your coverage to another carrier.... The tail charges are guaranteed in the policy and are in no way subject to underwriting whims.
Therefore continuous, rather than term coverage is intended and provided. As the plaintiffs and the insurance agents that sold the policy testified at trial, the policy was sold as a “four year package” deal.
As the majority explains, some of the provisions in the policy and endorsements suggest that the policy was an extended package or the continuation of a single contract. When the contract is interpreted based on the intent of the parties as a continuous policy, it can be seen that the trial court correctly found that PHICO was bound by the terms of the original contract and unilaterally breached the contract by changing the terms of the tail policy provisions.
IV
I agree with the majority affirmance of the trial court finding that PHICO engaged in fraud, misrepresentation and bad-faith conduct with regard to its nonrenewal of its independent physician insureds in Colorado. The court of appeals held that these were statements of opinion relating to future events, and therefore not actionable. As the majority points out, however, a promise concerning a future act, coupled with the present intent not to fulfill the promise, can be misrepresentation actionable as fraud. Citing Kinsey v. Preeson, 746 P.2d 542, 551 (Colo.1987). I write to clarify the basis on which I support the result reached by the majority.
PHICO marketed the malpractice policy by representing it was a stable organization that intended to provide insurance in Colorado well into the future. The trial court found:
The representation that PHICO would be in Colorado for the long-haul was particularly important because of the claims-made insurance contract. The claims-made contract is premised on the understanding that the insured would stay with the company for a number of years, and at retirement would purchase a tail policy. Nearly every doctor testified that they intended to purchase a tail policy “one time” in their career — at the time of their retirement. This understanding was implicit in PHI-CO’s representations that the purchase of a tail policy was a “one time” event.
Throughout PHICO’s involvement in the insurance business in Colorado, PHICO mar*1371keted itself and specifically its hybrid elaims-made policy by promising PHICO would be in Colorado for the long haul. PHICO’s 1984 marketing plan stated: “We know full well the consequences to policyholders when carriers pull in and out of the market. We don’t do that.” PHICO claimed it was a “company that will stay by you in the long run,” and they were “in the market to stay.” PHICO also asserted: “We have a permanent commitment to remain and work with our policyholders as partners in the future.” In marketing its hybrid elaims-made policies in 1985, PHICO represented that it had to raise its rates so that “it can remain viable to meet the insureds’ needs in the long run.”
Additionally, when rate increases were announced in the spring of 1985, PHICO justified such rate increases on the basis that the increases would make it possible for PHICO to cover the independent physicians into the future. However, PHICO had decided in October 1984 to begin to eliminate coverage for independent physicians and then purchased advertising space in commercial journals declaring that PHICO would be available to physicians in the long run. The representation that PHICO would cover physicians into the future was especially important in light of the nature of the hybrid elaims-made policies purchased by the physicians. Only if PHICO remained in business could the physicians purchase the tail policy.
The promise to remain in Colorado into the distant future was coupled by a present intent not to fulfill that promise. For example, PHICO continued to represent that it was stable and would stand behind the physicians in the long run, even though it was reducing its coverage of independent physicians, raising rates and renewing policies in preparation to leave the Colorado market. The trial court found:
PHICO’s representations that it would be available for the “long haul” continued up to the date of its announcement of withdrawal from the Colorado market. In June 1986, a number of physicians, concerned about the announced withdrawal of the Hartford Insurance Company from the Colorado market called PHICO’s agents and brokers to inquire into the possibility of similar action by PHICO. As late as this time, the defendant continued to reassure the doctors that they had no intention of leaving the state. It is extraordinary to note, after a review of the individual doctor’s findings of fact, that 26 of the plaintiff doctors were specifically reassured in the several months prior to the PHICO withdrawal that PHICO would stay in the Colorado market.
I agree with the majority’s holding that PHI-CO’s unfulfilled promises to stay in Colorado amounted to fraud. The trial court found, based on the evidence in the record, that PHICO did not intend to fulfill its promises.
V
The trial court found that PHICO engaged in bad-faith insurance practices leading up to and culminating in the nonrenewal of the physician’s insurance policies. The court of appeals, however, drew a distinction between an insurance company’s obligations toward its insureds when it is deciding not to renew an insurance policy and its obligations toward its insureds in other stages of the insurer-insured relationship.17 The majority disagrees with the court of appeals and extends the good-faith requirement of insurers to encompass the insurer’s decision to renew. I write separately to point out why the good-faith requirement exists outside the claims context and to state my view that the majority’s application of the good-faith requirement should be limited to the facts in this case.
It is the express policy of the state that all insurers act in good faith in all matters pertaining to the business of insurance. The insurer’s duty to act in good faith is set forth in section 10-1-101, 4A C.R.S. (1987) as follows:
Legislative Declaration. The general assembly finds and declares that the purpose of this title is to promote the public welfare by regulating insurance to the end that *1372insurance rates shall not be excessive, inadequate, or unfairly discriminatory, to give consumers thereof the greatest choice of policies at the most reasonable cost possible, to permit and encourage open competition between insurers on a sound financial basis, and to avoid regulation of insurance rates except under circumstances specifically authorized under the provisions of this title. Such policy requires that all persons having to do with insurance services to the public be at all times actuated by good faith in everything pertaining thereto, abstain from deceptive or misleading practices, and keep, observe, and practice the principles of law and equity in all matters pertaining to such business.
(Emphasis added.) In Travelers Insurance Co. v. Savio, 706 P.2d 1258, 1268 (Colo.1985), the court noted that the duty of good faith “permeates all of the dealings” between the insurer and the insured. The duty to act in good faith is unequivocal and is not limited to certain stages of the insurer-insured relationship, including the insurer’s decision not to renew.
Nevertheless, an insurer may choose not to renew an insurance policy for any reason unless the insurance policy provides otherwise. Buell v. Security Gen. Life Ins. Co., 779 F.Supp. 1579, 1581 (D.Colo.1991), aff'd, 987 F.2d 1467 (10th Cir.1993), cert. denied — U.S. -, 114 S.Ct. 308, 126 L.Ed.2d 255 (1993). If there is no clause in the policy granting a privilege or imposing a duty of renewal, neither party has an absolute right to require renewal. Thus, the rights of the parties under a contract are mutual in the sense that neither is bound to renew the contract. Under such a policy, the insurer may decline to renew the policy at the end of a premium payment period. 18 George J. Couch, Cyclopedia of Insurance Law § 68.12 (2d rev. ed. 1983). The reason behind this policy is parties should have the right to contract freely within the bounds of decency and public policy.
A general limitation of the ability of an insurer to contract, or not to contract, for what ever reason would be an impermissible and unwise invasion into the business judgment of the insurance carrier. Accordingly, the Colorado cases addressing bad faith uniformly focus on an insurer’s claims handling practices and not on the renewal of a policy.18 See American Cas. Co. v. Glaskin, 805 F.Supp. 866 (D.Colo.1992) (applying Colorado law) (permitting an insured to sue where the insurer unreasonably denied coverage under the terms of a policy); Travelers Ins. Co., 706 P.2d at 1274 (allowing an insured to sue in tort where the insurer unreasonably and knowingly denies or delays payment of an insured’s claims); Farmers Group, Inc. v. Trimble, 691 P.2d 1138 (Colo.1984) (holding that an insurer who unreasonably and in bad faith denies or delays payment of a claim may be liable for bad faith); Rederscheid v. Comprecare, Inc., 667 P.2d 766 (Colo.App.1983) (permitting an insured to sue in tort where the insurer unreasonably and knowingly denies or delays payment of an insured’s claims). To date, no jurisdiction has expanded the good-faith requirement to include the making or pricing of a contract, even in the nonrenewal context.19
Although parties have a liberal right to contract freely, the nature of the claims-made coverage suggests that there should be some type of good-faith limitation on renewal of such policies albeit modified by acknowledgment of the essential right to freedom of contract and business judgment. Claims-made insurance discourages competitive shopping at the time of renewal. To change carriers, an insured is required to purchase a tail policy as well as pay the premium for the new insurance. It makes the policyholder a virtual economic captive of the insurer. The *1373unique nature of claims-made insurance gives rise to heightened duties during renewal negotiations because claims-made insurance contemplates a continuing relationship between the parties.
I agree, therefore, with the majority’s conclusion that the good-faith requirement extends beyond the cancellation and claims context to the nonrenewal context.
For the forgoing reasons I specially concur in the reversal of the court of appeals for reasons that differ in some respects from those set forth in the majority opinion.
I am authorized to say that Justice SCOTT joins in the special concurrence in the result.

. An employed physician is a physician who is employed by a hospital. An independent physician is a physician who has his or her own private practice. Independent physicians have privileges at hospitals but are not employed by them. Each of the 105 plaintiffs is an independent physician.

. The policy in this case provides coverage for "a medical incident occurring during the policy period and subsequent to the initial effective date shown in the Declarations, for which claim is first made against the insured and reported to the Company during the policy period." "Claims-made" coverage is discussed infra part II.

. From 1982 to April 1985, the following endorsement was issued with the policy:
... Extended reporting period form ("tail”) premiums are percentages of mature claims-made (fourth-year) premiums and increase each policy year for 3 years and then remain constant. These percentages follow:
Claims-Made
Policy Year Policy Premium Tail Premium
First Year 28% 79%
Second Year 56% 112%
Third Year 80% 118%
Fourth Year 89% 118%

. For a description of the difference between claims-made and occurrence policies, see Andrew S. Hanen & Jett Hanna, Legal Malpractice Insurance: Exclusions, Selected Coverage and Consumer Issues, 33 S.Tex.L.J. 75 (1992); Katharine Rosenberry & Clifford J. Treese, Purchasing Insurance For the Common Interest Community, 27 Wake Forest L.Rev. 397 (1992); Carolyn M. Frame, "Claims-Made" Liability Insurance: Closing the Gaps With Retroactive Coverage, 60 Temp.L.Q. 165 (1987); John K. Parker, The Untimely Demise of the “Claims Made" Insurance Form? A Critique of Stine v. Continental Casualty Company, 1983 Det.C.L.Rev. 25, 27-28; Sol Kroll, The Professional Liability Policy “Claims-Made”, 13 Forum 842, 843 (1978). Each source states that a claims-made policy covers all claims made during the policy period for acts or omissions regardless of when the liability inducing event occurs.

. This type of policy was involved in Mutual Fire, Marine & Inland Insurance Co. v. Vollmer, 306 Md. 243, 508 A.2d 130, 136 (1986) where the policy became effective on August 1, 1977, and was retroactive only to August 1, 1975. The difference among claims-made policies is often the 'retroactive date.' The retroactive date is the date that defines coverage for claims arising before the inception of the policy in effect at the time the claim is made. If the event occurred before the retroactive date, the claims-made policy will not provide coverage. The insurer is free to impose whatever retroactive date it chooses subject to the request and acceptance of the insured. See Donald S. Malecki & Arthur L. Flitner, Commercial General Liability: Claims-made and Occurrence Forms 76-77 (3rd ed. 1990).

. An excellent description of the types of policies is set forth in Parker, supra note 4, at 27-28 (footnotes collecting cases omitted) which states;
Generally speaking, "occurrence” policies cover liability inducing events occurring during the policy term, irrespective of when an actual claim is presented. Conversely, "claims-made” (or "discovery”) policies cover liability inducing events if and when a claim is made during the policy term, irrespective of when the events occurred. There are, of course, hybrids of the two varieties.
As the majority correctly notes, the hybrid claims-made policy has been held unconstitutional as a violation of public policy in at least one jurisdiction when the insured's objectively reasonable expectation was that he was the beneficiary of a claims-made policy which covered claims made irrespective of when the events occurred. See Sparks v. St. Paul Ins. Co., 100 N.J. 325, 495 A.2d 406 (1985). However, the policies at issue in this case, unlike the policy in Sparks, provided mechanisms (for a price) for both prospective and retroactive coverage. Therefore, the constitutional difficulty encountered in Sparks is not present here because the plaintiffs were not under a reasonable expectation that they were the beneficiaries of claims-made policies that covered all claims irrespective of when the events occurred.

. If the prior policy was an occurrence policy or the doctor was being insured for the first time, no additional retroactive coverage would be needed.

. Insurance policies are to be interpreted according to the language in the policy. Although the insurance policy face sheet defines the policy as a "claims-made policy,” the fact that the language of the policy states it only covers events which occur during the policy period and which are reported during the policy period make this a hybrid claims-made policy.

. The tail policy is so important to providing adequate coverage for a claims-made policy or a hybrid claims-made policy that the option to purchase a tail policy is now required by statute. § 10-4-419, 4A C.R.S. (1987 & 1993 Supp.). This statute was not in effect when the events in this case occurred.

.Prior acts coverage was not feasible for the independent physicians in this case. By the time PHICO announced its withdrawal, the primary medical malpractice provider, the Hartford Insurance Company, had also withdrawn. The primary remaining insurer was COPIC Trust which did not have enough surplus to absorb the additional premium from the influx of insurance applications. COPIC Trust did not offer prior acts coverage.
Later in 1986, the Doctor's Company was admitted to Colorado. Some of the independent physicians purchased prior acts coverage from the Doctor's Company instead of buying a tail policy from PHICO. In order to obtain prior acts coverage, the doctors had to pay the "mature" premium rate instead of a first year rate.

. PHICO marketed their policy by noting the savings to doctors.

. An endorsement attached to an insurance policy is the last expression of intent and prevails if it conflicts with the language of the policy. Martinez v. Hawkeye-Security Insurance Co., 195 Colo. 184, 187, 576 P.2d 1017, 1019 (1978).

.Resolution of the central issue in this case does not require reading the contract in favor of one party. If we can read the contract so that it carries out the intent of both parties, we do not need to construe it against a party. Construing a contract against a party should be reserved for situations in which no plain meaning can be found and no common intent can be ascertained.

. The trial court recognized the conflict between the declaration, which suggests a one-year term, and the endorsements, which suggest a continuous policy, stating:
The insurance contracts in this case are reflective of the fundamental conflict between occurrence and claims-made philosophies. The declaration and the body of the contract harkens back [to] (and, in fact, seems to borrow language from[) ] the earlier occurrence concept, while the endorsement and descriptive language thereto foreshadows the difficulty of the claims-made concept.

. Specifically, the contract provides:
Individual Professional Liability: The Company will pay on behalf of the insured all sums which the insured shall be legally obligated to pay as damages because of injury to which this insurance applies caused by a medical incident occurring during the policy period and subsequent to the initial effective date shown in the *1370Declarations, for which claim is first made against the insured and reported to the Company during the policy period, arising out of the practice of the insured’s profession as a physician or dentist.
(Emphasis removed.)

. In April 1985, PHICO made the following endorsement:
Tail premium percentages applicable during the policy period of this policy are provided below for your information:
Year Tail Premium Percentages
First Year 89%
Second Year 134%
Third Year 140%
Fourth Year 140%
(Emphasis added.) A second year policy could have alternatively simply read "you may purchase a tail policy at 134% of what would have been the fourth-year rate.”

. The court of appeals stated:
[W]hen an insurer decides not to renew a policy, it has already fully performed its contract and there no longer exists that special relationship giving rise to a duty of good faith. Ballow v. PHICO Ins. Co., 841 P.2d 344, 353 (Colo.App.1992).

. Other jurisdictions also recognize the good-faith requirement for the cancellation of policies as well as for claims handling practices. See, e.g., L'Orange v. Medical Protective Co., 394 F.2d 57 (6th Cir.1968) (stating that cancellation of a malpractice policy violated public policy where cancellation was for purpose of coercing and intimidating dentist as a witness in a pending malpractice suit); Gahres v. PHICO Ins. Co., 672 F.Supp. 249 (E.D.Va.1987) (holding the cancellation of a policy may require good faith while nonrenewal raises no obligations for the insurer); Spindle v. Travelers Ins. Co., 66 Cal.App.3d 951, 136 Cal.Rptr. 404 (1977) (stating it was bad faith to cancel a malpractice policy to make an example to other insureds and induce them to pay higher premiums).

. Other jurisdictions which have addressed the issue presented here have held that, as a matter of law, insurance companies have no obligation to renew an insurance policy absent a statutory *1373or contractual obligation. Gahres, 672 F.Supp. at 253; Travelers Ins. Co. v. Lesher, 187 Cal.App.3d 169, 231 Cal.Rptr. 791 (1986); Coira v. Florida Medical Ass'n, Inc., 429 So.2d 23 (Fla.App.1983); Egnatz v. Medical Protective Co., 581 N.E.2d 438 (Ind.App.1991); Gautreau v. Southern Farm Bureau Cas. Co., 429 So.2d 866 (La.1983); Madden v. Indiana Lumbermen's Mut. Ins. Co., 451 S.W.2d 764 (Tex.App.1970); Armstrong v. Safeco Ins. Co., 111 Wash.2d 784, 765 P.2d 276 (1988). The application of the good-faith requirement in the cancellation and claims adjusting contexts as opposed to the nonrenewal context is that during cancellation or adjusting, the insurer is acting under the terms of the contract. When the insurer exercises its decision whether to renew, the contract has been fully performed and no further obligation exists under the contract. See Gahres, 672 F.Supp. at 253.