Carrier’s Late Notice Argument Fails
After defending and paying a claim under a reservation of rights a professional liability insurer sued to recoup its payment of an over $18 million arbitration award against its insured, an investment advisory firm. The carrier alleged the claim was not covered under any of three professional liability insurance policies. It argued its insured should have notified it of a fee dispute because it viewed the claims and demand of the parties to a business deal as related. The appellate court concluded the fee dispute, for which there would no coverage, arose from the insured’s alleged mismanagement under a management services contract, and did not relate to the insured’s advice under a prior services contract. The arbitration demand and complaint related to issues specific to the insured’s separate agreement and therefore did not invoke the notice provision.