Applying New York law, the United States Court of Appeals for the Second Circuit has held that a claim against a broker-dealer was subject to a $1 million limit on liability, rejecting the insured’s argument that the claim was subject to a $7.5 million limit. Catlin Spec. Ins. Co. v. QA3 Fin. Corp., 2015 WL 6684207 (2d Cir. Nov. 3, 2015). The court also held that the insurer’s failure to settle within the higher limit was not in bad faith because the insurer had an arguable basis for denying coverage above the $1 million limit.
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