Claims Made Catch-22 Results in Win for Carrier

A law firm was notified of a potential malpractice claim on March 29, 2009 and referred the matter to its professional liability insurer, Westchester Fire Insurance Co. (WFIC). The firm was covered under successive WFIC claims made polices from April 2007 through April 1, 2010. The court determined that WFIC was not obligated to provide the law firm with a defense.  The Complaint alleged that, at the inception of the 2008 – 2009 Policy (April 1, 2008), the firm had a reasonable basis to believe that it had breached professional duties owed to its client that might result in a malpractice claim when a decision adverse to its client came down in September of 2007.  The court held that since the claim or potential claim had not been reported during the 2007-2008 policy period, there was no duty to defend or indemnify.