Lawyer fails to compel insurer to retroactively provide malpractice coverage

On May 31, 2011, two months before the 2010 policy expired, Hartford allegedly mailed Sicari a letter advising there would be a "[r]eduction in [c]overage" regarding "[l]awyer's [p]rofessional [l]iability." Attached to the letter was a notice stating Hartford was "no longer writing [l]awyer's [p]rofessional [l]iability coverage as an endorsement to its … policy." 

Sicari later testified that he had never received the May 31, 2011 letter and that he had been unaware it existed until he received a copy in discovery. 

Broker emailed application

On June 21, 2011, Sicari signed a renewal application for lawyers' professional liability insurance coverage and submitted the application to the insurance broker. On July 13, 2011, the broker emailed the application to Hartford and requested Hartford to review the application and contact the broker with any questions.

Hartford received Sicari's application, but never notified the broker whether it contained any deficiencies or that it "was not going to be processed[.]" According to the broker, Hartford normally responded to renewal applications by indicating it received and was processing the application, received and was not processing the application for certain reasons, or lacked adequate information to determine whether to process the application.

The broker later said that when he failed to receive a response, he assumed Hartford was still processing the application. 

Without responding to Sicari's renewal application for lawyers' professional liability insurance, Hartford issued a policy for the July 31, 2011 to July 31, 2012 period (the "2011 policy"). Except for the lawyer's professional liability coverage, which Hartford no longer provided, the 2011 policy provided substantially the same coverage as the 2010 policy. The premium for the 2011 policy was $649, a $2,079 reduction from the 2010 policy. 

No reference to coverage in renewal notice

Sicari renewed the Hartford policy for the July 2012 through July 2013 period (the "2012 policy") at a premium of $663. The 2012 policy contained no reference to lawyer's professional liability coverage. The 2011 and 2012 polices provided coverage for commercial general liability and business personal property only. Sicari apparently did not file a renewal application for lawyers' professional liability insurance for the 2012 policy period. 

Related: Rates are steady, but losses are severe in the professional liability market

In June 2013, when Sicari began receiving mass mailings from insurance providers regarding malpractice coverage, he contacted his insurance broker and inquired about his own malpractice insurance. A few weeks later, the insurance broker informed Sicari that his malpractice coverage had lapsed. Thereafter, in July 2013, Sicari said he discovered a potential malpractice claim against him. 

Based on these circumstances, Sicari sued Hartford, seeking to compel it to provide retroactive lawyers' professional liability coverage in accordance with his June 2011 renewal application.

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Trial court ruled Hartford gave sufficient notice

The trial court granted summary judgment in favor of Hartford. It ruled that the insurer's May 31, 2011 letter was "sufficient to notify [p]laintiff that Hartford would not renew the professional liability coverage in [p]laintiff's policy" and "Hartford fully complied with the regulatory requirements for notification of nonrenewal."

That, coupled with "the drop in the premium and the absence of any mention of lawyers' professional liability coverage in the text of the 2011 and 2012 policies," proved that Sicari had "statutory and sufficient notice of the change in [his] coverage and cannot argue … [he] was reasonably unaware" he lacked coverage.

The trial court also ruled that Mr. Sicari's renewal application had not created a contract between Mr. Sicari and Hartford.

Mr. Sicari appealed. 

New Jersey law 

New Jersey law provides that: 

[n]o [insurance] policy shall be nonrenewed upon its expiration date unless a valid written notice … has been mailed or delivered to the insured in accordance with the provisions of this subchapter."

N.J.A.C. 11:1-20.2(a). 

A nonrenewal notice is not valid unless sent by certified mail or by first class mail:

if at the time of mailing the insurer has obtained from the Post Office Department a date stamped proof of mailing showing the name and address of the insured[.]

N.J.A.C. 11:1-20.2(i). 

'Should have noticed'

The appellate court affirmed.

In its decision, the appellate court first ruled that Hartford's May 31 notice "complied with the regulatory requirements for non-renewing the professional liability coverage in [Mr. Sicari's] policy." That  Sicari had been unaware of the contents of the notice did not render Hartford "non-compliant" with the law, according to the appellate court. 

Moreover, the appellate court added, Sicari was "charged with knowledge of the policy's contents." According to the appellate court, Sicari himself "should have noticed the absence of lawyers' professional liability coverage on his declarations page and the sharp drop in premiums for his 2011 and 2012 policies." That large premium drop should have been a "red flag," and Sicaro's apparent failure to take notice weakened his argument for coverage, the appellate court said. 

Better practice?

The appellate court stated that although the better practice would have been for Hartford to notify Sicari or his broker after it had received the renewal application that lawyers' professional liability coverage would not be renewed for Mr. Sicari, Mr. Sicari's completion of the renewal application "did not obligate Hartford to process the application and renew insurance in a category for which coverage was no longer offered."

Sicari's renewal application did not create a contract between himself and Hartford because Hartford "did not offer lawyers' professional liability coverage" as part of Sicari's renewed insurance policy, the appellate court concluded. 

The case is Sicari v. Hartford Ins. Co. of the Midwest, No. A-0492-15T1 (N.J. App.Div. May 10, 2017). Attorneys involved include: Vince A. Sicari, appellant pro se; Mound Cotton Wollan & Greengrass, LLP, attorneys for respondent (Frank J. DeAngelis, on the brief).

Steven A. Meyerowitz, Esq., is the director of FC&S Legal, the editor-in-chief of the Insurance Coverage Law Report, and the founder and president of Meyerowitz Communications Inc. Email him at smeyerowitz@meyerowitzcommunications.com.