New York’s Highest Court Holds Insurer Responsible Up to Policy Limits Where It Refused to Defend Attorney in Underlying Suit Alleging Professional Malpractice for the Lawyer’s Conduct Acting in His Capacity as a Principal of a Business and Insurer Could Not Invoke Policy Exclusions to Coverage

Amicus Curious

This is a rather unremarkable case from the point of view of the legal rules expressed by the opinion, but I wanted to highlight a few significant points for clients to consider when addressing the parameters of an insurer’s duty and the risk involved in not taking affirmative action if a dispute arises or, better yet, is anticipated.

The facts are somewhat peculiar, bringing into question a professional liability insurer’s duty to defend and indemnify claims regarding a business deal engaged in by its insured (an attorney) in which there appears no doubt the attorney was acting as a businessman and not an attorney in the endeavors that gave rise to the underlying claims.

The opinion, K2 Inv Group LLC v American Guarantee And Liability Ins Co, N.Y. Court of Appeals, No. 106, June 11, 2013, was released by New York’s highest court in June.  It demonstrates intolerance courts…

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