Wholesale Insurance Broker Not Liable For Failing To Timely Notify Excess Insurer; Retail Broker Potentially Liable For Failure To Follow With Insured

In Abetta Boiler & Welding Service, Inc. v. American International Specialty Lines Insurance Company, et al, the First Department dismissed a Wholesale Insurance Broker from the action on the basis that it did not owe a duty to the insured to timely notify the insured's excess carrier of a wrongful death claim. The Retail Broker had forwarded notice of claim and all of the information in its possession to the Wholesale Broker, but the Retail Broker failed to follow up with either the Wholesaler or the excess carrier to ascertain whether notice was received. Since the Retail Broker was the only party who owed a duty to the insured, the Wholesaler could not be held liable for failing to forward the notice of claim to the carrier.

The First Department further held that a question of fact existed as to whether the Retail Broker owed a duty to the insured to monitor pending claims to ascertain whether they had given rise to lawsuits against the insured. The excess carrier required both timely notice of claim and timely notice of the action. Since the Retail Broker did not receive notice of the wrongful death action, an issue of fact existed as to whether the Retail Broker should have followed up with the insured to determine if such an action had been commenced.