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SETTLEMENT WITH INSURER DID NOT RESOLVE THE UNDERLYING WRONGFUL DENIAL OF COVERAGE ALLEGATION AGAINST THE INSURER, THE ACTIONS AGAINST THE INSURANCE BROKERS, ALLEGING FAILURE TO PROCURE THE REQUESTED INSURANCE, SHOULD NOT HAVE BEEN DISMISSED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the defendant insurance brokers’ (Praxis and HUB) motion to dismiss should not have been granted. Plaintiff settled with the insurer (Affiliated) on its breach of contract claim (which alleged the claim was wrongly denied). Plaintiff’s actions against the brokers alleged failure to procure the requested coverage:

… [T]he validity of Affiliated’s denial of the plaintiffs’ claim for property damage remains undecided, notwithstanding the fact that the plaintiffs settled this action with respect to Affiliated … . The complaint alleges that the denial was based on actions taken by Praxis and the HUB defendants. Should the plaintiffs prevail on their causes of action against Praxis and the HUB defendants, any damages they recover must necessarily be reduced by the amount of the settlement from Affiliated, in order to avoid a double recovery … . Prime Alliance Group, Ltd. v Affiliated FM Ins. Co., 2018 NY Slip Op 01630, Second Dept 3-14-18

INSURANCE LAW (SETTLEMENT WITH INSURER DID NOT RESOLVE THE UNDERLYING WRONGFUL DENIAL OF COVERAGE ALLEGATION AGAINST THE INSURER, THE ACTIONS AGAINST THE INSURANCE BROKERS ALLEGING FAILURE TO PROCURE THE REQUESTED INSURANCE SHOULD NOT HAVE BEEN DISMISSED (SECOND DEPT))/BROKERS (INSURANCE) (FAILURE TO PROCURE REQUESTED COVERAGE, SETTLEMENT WITH INSURER DID NOT RESOLVE THE UNDERLYING WRONGFUL DENIAL OF COVERAGE ALLEGATION AGAINST THE INSURER, THE ACTIONS AGAINST THE INSURANCE BROKERS ALLEGING FAILURE TO PROCURE THE REQUESTED INSURANCE SHOULD NOT HAVE BEEN DISMISSED (SECOND DEPT))

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