This E&O claim took Fireman’s Fund 10 years to resolve.

A PAR insured firm wanted to start its own homeowners insurer. Although PAR did not provide any coverage for this new venture, the third-party administrator (TPA) which was going to pay the claims was insured by PAR. Three new employees were hired to work for both the homeowners insurer and the TPA.

The former employer of these three individuals, the principal of an automobile insurer who had also recently established its own homeowners insurance company, was livid. He claimed his former employees had stolen trade secrets.

No Merit to Allegations
A lawsuit was filed against the TPA and the homeowners insurance company which jointly had hired away the three employees. Fireman’s Fund determined the allegations were without merit, as the supposedly proprietary information was easily researched industry knowledge, plus, it was questionable as to whether the information was ever used by the PAR-connected insurance company.

Defendants Added
The plaintiff, however, refused to budge. He had both the time and the dollars to pursue litigation, adamant that he deserved a jury trial.

Over time, the list of defendants increased as the angry plaintiff claimed additional parties (specifically outside consultants and attorneys who had given advice to both of the homeowners insurers) also were at fault. As a result, the original complaint was amended five times during the 10-year time period.

The plaintiff had originally sought $32 million in damages. After a decade of escalating legal expenses, PAR finally had an opening to settle for $300,000 in indemnity -- and did. Given the remarkable length of time involved in this case, PAR had amassed over $1.4 million in legal fees.

This just goes to show how expensive it can become to defend your position from an unyielding opponent, even when you’re not at fault in the first place.