No Duty to Defend Claim Seeking Return of Premiums Based on Policy Exclusion

The United States District Court for the Eastern District of Pennsylvania, applying Pennsylvania law, has held that a professional liability insurer has no duty to defend an insured insurance agency against a claim seeking return of premium payments pursuant to an exclusion in the policy barring coverage for any claim to recover premiums.  TRI-ARC Fin. Serv., Inc. v. Evanston Ins. Co., 2016 WL 7178419 (E.D. Penn. Dec. 8, 2016).

In the underlying claim, the plaintiff alleged that it had paid premiums to an insurer but had never received actual insurance coverage.  The insurer filed a petition requesting that the insurance agency be named as a third-party defendant and assigned a portion of the liability.  The insurance agency sought coverage under its professional liability insurance policy, which excluded coverage for any claim “based upon or arising out of . . . any Claim for loss monies received by the Insured . . . for premiums[.]”  The insurer denied coverage on the grounds that the claim demanded a return of premium payments, which is excluded under the policy.  The insurance agency then filed suit against the insurer, and the insurer filed a motion to dismiss.

In granting the insurer’s motion to dismiss, the court held that the relevant exclusion was clear and unambiguous, barring coverage for any type of claim that seeks recovery of premiums.  Because the claim against the insurance agency sought only damages in the form of lost premium payments, the court held that it fell within the policy’s exclusion, and the insurer had no duty to defend.