Is There a Duty to Advise?

The Alabama Supreme Court recently issued what could turn out to be an important decision on the duty to advise. The court in Somnus Mattress Corp. v. Hilson, 2018 WL 6715777 (Ala. Sup. Ct. Dec. 21, 2018) affirmed a decision dismissing claims against an insurance agent for alleged negligence in failing to advise a mattress manufacturer to purchase business interruption loss coverage. While the plaintiff manufacturer argued that the agent should be held responsible for the uninsured loss he suffered following a fire that destroyed his mattress factory, the Court held that an insurance agent/broker generally does not have a duty to advise and cannot be deemed to have assumed a duty to advise. The court laid out important exceptions to the rule: (1) the insurance agent/broker misrepresented the coverage in a manner that the insured could not have known from a reading of the insurance policy, or (2) the agent/broker and insured were in a "special relationship."
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Insurance Agent Liability Limited in Illinois

The Illinois Supreme Court recently issued an opinion which impacts the timing of suits against insurance agents. In American Family Mutual Insurance Co. v. Krop, the policyholders were denied coverage in a lawsuit brought against their son for cyber-bullying. They responded with an action against their insurance agent, alleging that he failed to procure coverage for certain intentional acts despite their request to do so. Although the policyholders sought to impose a heightened fiduciary duty standard, the Court instead viewed the claim as one for breach of contract.
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Guilt by Association

Making a referral is most often understood as a recommendation as to the quality of that professional’s services or products. In turn, there are different tort theories that are recognized in many states for negligence in doing so, and potential liability for the actions of a referred professional. What is far less common is to allow liability to flow through several parties even absent independent conduct or a theory of agency.
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Negligence Claims Against Insurance Adjusters?

Claims professionals, a/k/a "adjusters" play an important role in evaluating and defending an insured claim as part of the tripartite relationship. When something goes wrong, it is not uncommon for the insured to turn on her attorney but the adjuster is never a target, right? Maybe not. At least two jurisdictions, New Hampshire and Alaska, permit claims of negligence against individual insurance adjusters on the theory that they owe a duty of ordinary care to conduct adequate investigations into an insured’s claim. Pennsylvania recently considered the issue and concluded that the Pennsylvania Supreme Court may permit such a claim against an insurance adjuster.
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Cleveland Indians Sue Insurance Broker following Wrongful Death Claim

It is generally understood that an insurance broker may be held liable for failing to obtain requisite insurance for the insured. But, there is plenty of room for debate when the broker fails to obtain coverage for a third-party; i.e. an additional insured. This issue was put to the test by the Cleveland Indians following the death of one of its patrons attending pre-game activities. According to the Sixth Circuit, the team stated a valid claim.
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Botched Weather Report Leads to Unusual Insurance Claim

A feud is developing between flower enthusiasts and the Philadelphia media arising from an "overly hyped” weather report. The possible remedy may be in the form of a lesser known insurance product. The Philadelphia Flower Show usually generates about $1 million in profits from its annual exhibit. But not this year. Reportedly, the show drew substantially fewer attendees than expected this year and organizers of the event are blaming a “botched” weather report. Now the event’s president is accusing Philadelphia media outlets of “hyping up” a major snowstorm during the week of the flower show that never materialized but led to scores of cancelled visitors. In turn, this led to about $1 million in losses. Is there insurance for this? You bet.
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