On the eve of a recent trial handled by my firm, the carrier for a client advised us that it had discovered the client was not, in fact, an insured on its policy, notwithstanding it had been providing the client with a defense for several years. Apparently, the client’s third-party administrator had sent the original notice of claim to the wrong carrier, who assigned counsel without confirming coverage. When a notice of claim was forwarded to the proper carrier, it naturally disclaimed on the grounds of late notice.
We wondered whether the original carrier would be estopped from disclaiming, since it had accepted the defense of our client without reservation, and assumed control of its defense for several years only to attempt to drop coverage on the eve of trial.
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