Case Summary: Insured not entitled to E&O coverage for advice in relation to failed real estate venture
E&O insurer not required to defend insured financial planner in negligence claim relating to failed real estate investment.
Insurance law – Errors and omissions policies – Duty to defend – Professional negligence
Malic v. Zurich Insurance Co.,  A.J. No. 544, 2021 ABQB 308, Alberta Court of Queen’s Bench, April 20, 2021, M. Hayes-Richards J.
The insured brought an application seeking a declaration that the insurer had a duty to defend him in an action alleging various breaches of duty in relation to an investment in a real estate venture.
The insured was a certified financial planner, a “Life-Designated Representative” and an “Accident & Sickness – Designated Representative”. The insured obtained errors and omissions insurance from the insurer. The policy provided coverage for activities relating to the sale of life insurance products and mutual funds.
The insured and the insurer disagreed on the scope of the underlying claim. The insured submitted the key facts were that he was an employee or contractor who provided investment advice and services in relation to a real estate venture. The insurer submitted the allegations in the underlying action relate to advice given by the insured on an unapproved, off-book real estate development in which the insured had a financial interest.
The court held that none of the allegations against the insured fell within the definition of professional services in the policy, which provided coverage for activities related to the conduct of the business of a licensed life insurance agent, or licensed accident and/or sickness insurance agent or a representative registered with the Mutual Fund Dealers Association of Canada. In the result the application was dismissed.
This case was digested by Cameron B. Elder, and first published in the LexisNexis® Harper Grey Insurance Law Netletter and the Harper Grey Insurance Law Newsletter. If you would like to discuss this case further, please contact Cameron B. Elder at email@example.com.