Evan Bolla Analyzes Impact of Second Circuit’s ‘Pine’ Decision on Professional Liability Insurance Claims for New York Law Journal
May 30, 2024
In a recent article for the New York Law Journal, Harris St. Laurent & Wechsler partner and general counsel Evan Bolla outlined key takeaways for policyholders with professional liability and other types of insurance coverage in light of the Second Circuit’s decision in Pine Management v. Colony Insurance Co. Specifically, he outlined why it’s crucial to tell insurers about potential claims even before there has been a specific demand made.
Bolla’s article explains how the Second Circuit concluded that a letter detailing alleged misconduct still constituted a claim despite having no specific demand for relief. The underlying lawsuit involved a claims-made policy, where coverage hinges on when a claim was made and reported rather than when the alleged misconduct occurred or costs arose.
The policyholder, rental apartment company Pine Management, had purchased professional liability insurance from Colony Insurance Co. while facing a lawsuit over alleged mismanagement. But when a letter from the plaintiff's attorney alleging wrongdoing was referenced in the complaint, questions emerged over whether that letter amounted to a claim — meaning it would fall outside the policy’s coverage boundaries because it predated the policy. The appellate panel found it did, concluding the insurer was correct to deny coverage.
“Pine suggests insureds should focus on whether the notice they receive includes misconduct allegations when assessing whether to report it,” Bolla writes. “The court implied that no one sends such letters for any purpose other than to make demands.”=
The article includes actionable insights for policyholders, including:
Frequently review insurance policies to understand key terms like "claim," "notice" and "reporting requirements."
Establish clear protocols for internal reporting of potential claims.
Keep detailed documentation of communications and incidents that could become claims.
Pay close attention to and report any incidents that could be labeled as potential claims during policy renewal periods.