In this most simple of legal malpractice cases, plaintiff was the victim of a rear-end Motor Vehicle accident.  She retained attorney who failed to bring the action within the statute of limitations.  Plaintiff sues attorney and settles for $ 50,000. which was the amount of the underlying car insurance.  She is said to have sought the approval of her own carrier for the settlement, but there was no response.

Now, when plaintiff seeks underinsured/uninsured coverage from her own carrier, it declines to cooperate and seeks to stay arbitration.  Was there double legal malpractice?  Should the underlying attorney have been liable for both primary and underinsured coverage amounts?

In Matter of Kemper Mut. Ins. Co. v Russell ;  2010 NY Slip Op 05847 ;Decided on July 1, 2010
Appellate Division, Third Department  we see the majority opinion:
 

"An insurer is obligated to pay under SUM coverage if the bodily injury liability insurance limits of its insured’s policy exceed those of the other policy, subject to the condition that "the limits of liability of all bodily injury liability bonds or insurance policies applicable at the time of the accident shall be exhausted by payment of judgments or settlements" (Insurance Law § 3420 [f] [2] [A]; see Matter of Federal Ins. Co. v Watnick, 80 NY2d 539, 546 [1992]). The statute, in short, "requires primary insurers to pay every last dollar, and requires [respondent] to accept no less, prior to the initiation of an underinsurance claim" (Matter of Federal Ins. Co. v Watnick, 80 NY2d at 546). The primary insurer here, however, has paid nothing, as respondent was forced to recover damages in a separate legal malpractice claim. As the other driver’s policy limit was not exhausted by payment, respondent’s own SUM coverage does not come into play, and Supreme Court should have granted petitioners’ application for a permanent stay. "

While the minority opinion comes to the conclusion that it is the amount and not the source of the insurance proceeds that controls, neither opinion asks whether the attorney should have demanded or obtained settlement in the amount of primary and underinsured coverage.