Meaning Of "Third Party Claim" In A "Claims Made" Policy

Malamit (a project manager) and its directors were insured under a claims-made professional indemnity policy, and was sued in negligence by a related company. The policy defined "claim" as particular proceedings brought by a "third party against the Insured", and excluded claims "by, on behalf of, or for the benefit of any insured, subsidiary, or family member of the insured."

A director and shareholder of Malamit was also sole director and a shareholder of the trustee of the claimant, Treetops, a unit trust. That director-shareholder and his family also held shares in the corporate unit-holders of the trust.

The insurer successfully argued at first instance that the claimant was not a "third party", as defined, and so the claim was not covered, and that the claimant was a subsidiary of the insured, and so any claim by it would be excluded.