Insurance Broker or Agent Malpractice Attorney Serving Policyholders throughout Florida and the United States
Most everyone has gone through the process of purchasing insurance. For most of us, it is probably something we do not look forward to doing. Many people hire an agent or broker to help them purchase the insurance they need. Businesses often require special coverages and engage a professional brokerage to assist in procuring the specific types of insurance and coverage that are needed.
Not only do we rely on insurance brokers and agents to procure/purchase the insurance coverage that we request, we often rely on them to help make claims, send reminders, and forward notices received by the insurance company. But what happens when a mistake takes place? For many policyholders, finding out that your insurance is insufficient due to a broker’s or agent’s mistake can lead to big damages and a total headache. The process of sorting out the events following a broker or agent’s negligence can be complicated and the assistance of an experienced insurance attorney can be a huge asset.
TYPES OF BROKER OR AGENT NEGLIGENCE ISSUES?
In Florida, and most other states, a broker or agent has a specific set of legal duties that are owed to a customer. These legal duties include procuring the correct insurance, procuring the correct coverage limits, communicating with the customer, and ensuring that the customer is receiving updates about changes to its customer. Of course, a broker/agent that offers advice to a customer may be liable if that advice was not sound. In addition, a broker/agent can interact with a customer in a manner that creates a “special relationship” that requires the broker/agent to provide good advice about the customer’s insurance needs.
The most common type of case that we see is when a broker or agent fails to procure or purchase the type of coverage that was requested by the customer. This occurs when the customer asks the broker/agent for a specific type of insurance coverage or specific limits, and the broker/agent fails to purchase that insurance.
Another example of agent negligence is when the agent or broker fails to forward notices or communications from the insurance company. However, it is not uncommon for an agent or broker to provide recommendations organize that the policyholder relies on to their severe detriment.
PROCURING OR PURCHASING THE CORRECT INSURANCE?
An agent’s essential duty is to procure or purchase the insurance requested by the customer. This means that your agent has an obligation to purchase the specific type of policy that was requested in the amounts of coverage that was requested. If the agent or broker is unable to purchase that insurance for you, then he or she must tell you promptly. While purchasing the correct type or amount of insurance may sound simple, the process of informing an agent or broker about the kind of insurance to purchase can be complicated. Many people use a broker/agent to purchase several different types of insurance policies or seek insurance that is fairly unique or specialized. It is important to realize that brokers/agents are people too, and sometimes they let things slip through the cracks or even worse. When the wrong insurance is purchased, the broker or agent may be responsible for resulting damages.
An agent also has a duty to inform you if the insurance you requested could not be purchased. Again, this duty sounds straightforward enough. However, there are instances where a delay in informing a customer that insurance could not be purchased leaves the customer exposed without proper insurance. If a loss occurs while the customer is uninsured, it could potentially be the broker/agent’s responsibility.
MISREPRESENTATIONS TO CUSTOMERS
Importantly, courts have held that an agent or broker cannot make misrepresentations to their customers. In situations where there has been a misrepresentation, there needs to be evidence that the policyholder relied on it and suffered damages as a result. Misrepresentation issues with agents sometimes involve a statement that the insurance was purchased when it was not. Another example of a fairly common misrepresentation occurs when a broker or agent tells a customer that the policy will cover certain events or has some other specific coverage or characteristic (such as the abscence of an exclusion). When a customer relies on a broker’s or agent’s misrepresentation, damages may be recovered, most commonly when there is a loss that is not covered.
DUTY TO KEEP INFORMED
A broker or agent generally has a duty to keep a policyholder informed. For example, if an agent receives a notice from the insurance company related to the policyholder, the agent needs to properly notify the policyholder. The reasoning behind this requirement is clear. Policyholders rely on brokers and agents for updates and notifications about their insurance. The agency relationship is based on following the customer’s request and providing timely updates.
In reality, the failure to inform a customer can have dire consequences. When a customer does not receive timely notice of something important – like a pending cancellation – the customer can be left with no coverage for a loss.
THERE IS NO GENERAL DUTY OF CARE OWED BY AN AGENT
Unlike a lawyer or a doctor, an insurance agent or broker does not owe a general duty of care. This is because an agent’s primary responsibility is to purchase the correct insurance and keep the customer informed. Sometimes an agent will voluntarily provide advice to a customer. For example, here are some types of advice that an agent may provide:
Florida courts have also explained that a broker/agent may have a larger scope of responsibility when it has a “special relationship” with a customer. This type of relationship arises in several situations including when there is a history of close dealings between the broker and customer. A special relationship may also arise when the broker induces the customer to rely on the broker to purchase suitable insurance.
WHAT KIND OF DAMAGES CAN BE RECOVERED?
Even though broker/agent negligence cases are frustrating, fortunately, insurance brokers typically have errors and ommissions insurance that provides coverage for malpractice.
Normally, the starting point for recovering damages in a broker or agent negligence case is the loss that should have been covered by the insurance that was requested. In addition, you may recover other consequential damages as well as general damages for stress and anxiety. It is important to keep in mind that the damages you can recover case specific.
WHEN TO HIRE AN ATTORNEY
Agent and broker negligence cases often have all or nothing implications. If your agent did not procure the insurance you needed or mispresented the insurance you purchased, you may be in a situation where there is no coverage for a significant loss. If you are dealing with a case of possible agent negligence, you should consult with an experienced attorney to discuss your options.