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Quote of the Day - I don't want to tell you how much insurance I carry with the Prudential, but all I can say is when I go, they go too. - Jack Benny
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Insurance Company's Coverage Dodge Doesn't Work To Avoid Liability To Third Party

You have to love insurance companies.  Here's a case about an insurance company that issued a policy to a company in India, doing business in India, to cover work done in India for an American company. 

But there was just one little problem for the insured and the American company that insisted the Indian company get insurance:  the policy excluded coverage for work done in India.  No problem for the insurance company, Zurich Specialties London Limited, though.  The company collected the premium and when the American company presented a claim, it denied the claim.

The American company, Business to Business Markets, Inc, (B2B) hired Tricon Infotech, an Indian software company to develop software for it.  B2B insisted that Tricon obtain errors and omissions insurance coverage, and informed the broker and insurance company that Tricon operated out of India.

Tricon did not deliver the software as promised, and B2B sued, only to find out that Zurich had issued the policy with an exclusion for coverage arising out of operations in India.

B2B sued Tricon and got a default judgment, which it then presented to Zurich for payment.  When Zurich denied B2B's claim, B2B sued Zurich.  The trial court believed that Zurich did not owe a duty of care to B2B and granted Zurich's demurrer, but that's about as far as that thought process went.  The court of appeal reversed and said that Zurich did owe B2B, a third party, a duty of care because B2B was the intended beneficiary of the policy Zurich issued to Tricon.  The court also ruled that Zurich could have foreseen harm to B2B and B2B actually did suffer harm.  It reversed the trial court's dismissal of B2B's case, and sent the matter back for further proceedings.

Zurich may yet have to pay the $922,480 judgment B2B got against Tricon.

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Printer friendly page Permalink Email to a friend Posted by J. Craig Williams on Tuesday, December 27, 2005 at 12:44 Comments Closed (0) |
 
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