On July 27, U.S. District Judge Michael Mills for the Northern District of Mississippi held that Lloyd’s of London would not be required to defend Mid-Delta Insurance Agency, Inc. (MDIA) under an errors and omissions policy against claims that MDIA employee Randal Henson made misrepresentations to an insurer.
Initially, MDIA and Henson filed suit in an attempt to force Lloyd’s and the United States Liability Insurance Co. to defend them against allegations that Henson misrepresented information on a client’s application for a commercial policy (issued by Republic Fire & Casualty Insurance Co.), which later prevented that client from receiving coverage after a fire occurred.
However, Judge Mills held that because the E&O policy was not in effect when Henson made the alleged professional errors, the mere fact that Henson’s subsequent sworn statements related to those actions did not bring his testimony within the ambit of the “professional services” covered by the E&O policy. Instead, the court strictly limited E&O coverage for “professional services” to the marketing, selling, or servicing of insurance products.
Further, though evidence existed indicating that MDIA had requested prior acts coverage from Lloyd’s, and that the E&O policy was in fact retroactive, the coverage dates for the policy had clearly not extended back to include the alleged professional errors in question.
Judge Mills chastised MDIA and Henson, noting “[a]s [Henson] is an insurance agent and [MDIA] is an insurance company, both should have known that the E&O policy did no provide coverage for prior acts.”
Counsel for Henson and MDIA is Mansour & Adams. Republic is represented by Webb Sanders & Williams LLP. Counsel for Lloyd’s is Upshaw Williams Biggers & Beckham LLP.
For a copy of this decision, click here.