Legal Insurer Liable for Loss Despite Notice Issues.

Chalk one up for the diligent little guy here. Cite-884 N.Y.S.2d 634 (2009)

In a recent New York State case involving claims for legal malpractice arising from the failure of an attorney to adequately and timely respond to a fire insurance claim loss, the person injured by the malpractice was able to keep the malpractice insurer responsible even after the target attorney failed to notify his insurer of the malpractice claim.

As discussed in this New York Real Estate Lawyer Blog in the past, late notice of a claim defenses have been harder and harder for the insurance industry. In this New York case, the negligent attorney failed to respond to plaintiff’s repeated attempts to obtain insurer information until after the policy notification period had lapsed. The insurer denied coverage for “late notice,” but under an applicable statute the claimant had the right to give notice after policy period had lapsed.

In denying the motion for summary judgment, the court held required the insurance company to indemnify the attorney for his malpractice, noting that there are circumstances in which injured parties can notify insurers of claims after the policy notification period has lapsed. Insurance Law Section 3420(a) so long as notice of the claim is as soon as reasonably possible once the insurer’s identity is discovered.

In this case, the claimant’s new attorney was diligent in attempting to ascertain the identity of the insurer and notified the insurer promptly after discovering its identity.

The Bottom line– injured parties in New York legal malpractice actions have some potential leeway when notifying the target insurance company of the claim, so long as it is diligent in ascertaining the identity of the insurer.