In a recent decision (click here), New York’s highest court weighed in on a long-standing debate over an insurance policy’s requirement that insureds obtain their insurers’ consent before settling a claim made against an insured.  In an opinion dated March 13, 2008, the New York Court of Appeals held that policyholder Bear Stearns had breached a “consent to settle” provision in its professional liability insurance policies by settling a claim without first obtaining its insurers’ consent.  In light of the fact that “consent to settle” requirements are considered  to be a condition precedent to insurance coverage, the result of the Court of Appeal’s decision is that there is no coverage available for any part of Bear Stearns’ $80 million  settlement with federal securities regulators.

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