Academic journal article Journal of Accountancy

Insurer Must Defend Accountant-Attorney

Academic journal article Journal of Accountancy

Insurer Must Defend Accountant-Attorney

Article excerpt

An Illinois appellate court ruled that a professional liability insurer must defend an insured accountant even if only one of the theories of recovery stated against the insured comes within the scope of coverage under the policy.

Martin J. Waltzman, who sued his insurer, was both an attorney and an accountant. On October 10, 1989, the defendant, Classic Syndicate, issued to him an accountant's professional liability policy for the period February 1, 1990, to February 1, 1993. One of the policy provisions said, "Retroactive coverage is hereby granted back to the first date that continuous claims-made coverage has been carried with minimum limits of $250,000."

On September 25, 1990, Capital Metals and Dydio, clients of the plaintiff, sued him for accounting and legal malpractice. His legal malpractice insurer subsequently sent a letter to Classic (the insurer) requesting coverage under the accountant's policy on behalf of the plaintiff. Classic requested proof of continuous coverage going back to the date (sometime between 1985 and 1986) on which the plaintiff began performing services for Capital Metals and Dydio. The plaintiff provided Classic with policies from March 5, 1984, to March 5, 1985; April 22, 1985, to April 22, 1986; and February 1, 1989, to February 1, 1990. Classic responded by claiming that the 1984 and 1985 policies did not list the plaintiff as a named insured and they would, therefore, deny coverage for the claim if he could not prove continuous coverage back to 1985. …

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