Real estate transactions occur all the time whether in the residential or commercial context. Notwithstanding a familial transfer, the arms-length transaction includes a buyer, a seller, and sometimes a bank or private money-lender who finances the deal. In some of those situations, there is also an escrow agent whose role is simply identified in the contract to be the “holder of the funds” while certain conditions are met post-contract. The escrow agent often keeps a fee for the services rendered, and becomes a mechanism for …Continue Reading
Category: Agents and Brokers
Duty to Read Defense
While the vast majority of states hold that an insurance broker cannot be absolutely shielded from his negligence in procuring coverage to the extent the insured failed to read the policy, there are still a few states where the “duty to read” can provide an absolute defense. One of those states is Mississippi. In a recent decision issued by the U.S. District Court for the Northern District of Mississippi, this rule was applied in a decision dismissing the case from federal district court based on …Continue Reading
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 …Continue Reading
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 …Continue Reading
Duty to Advise & Special Circumstances
The North Dakota Supreme Court recently affirmed the dismissal of a negligent failure to advise claim based on the failure to establish “special circumstances.” The decision is a nice win for insurance agents and brokers.
In Dahms v. Nodak Mutual Ins. Co., 2018 WL 6380779(Sup. Ct., North Dakota, Dec. 6, 2018), plaintiffs were homeowners who had afire that destroyed their garage and an “elaborate deck” they had constructed on it. While their homeowner’s policy provided coverage for the loss, the policy had separate limits …Continue Reading
Agent/Broker Developments: Take Note
Often, case-law relating to insurance agent/broker E&O typically involves the procurement of property/casualty insurance or the handling of property/casualty claims. However, there have been some recent developments relating to the duties and responsibilities of life insurance agents/brokers that are important to note.
First, in an unpublished decision by the California Court of Appeal, Second District in Randle v. Farmers New World Life Insurance Co., LINK, the court considered the ongoing duties and responsibilities of an insurance broker to provide advice and guidance to …Continue Reading
Case Study: Is a Broker a Fiduciary?
In a decision addressing the facts necessary to plead a breach of fiduciary duty claim against a broker, a California federal district court considered the difference between an “ordinary” broker-customer relationship, and one which rises to the level of a fiduciary relationship.
In Owner’s Management Co., the plaintiff (“Owner’s”) was an independent senior living property management company. Allegedly at the recommendation of its long-term broker, (“Broker”), Owner’s selected a self-funded employee healthcare benefit plan that was supposed to minimize Owner’s costs and potential exposures. …Continue Reading
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.
A recent New Jersey Appellate decision appears to do just that by holding a …Continue Reading
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 …Continue Reading
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.
Cleveland Indians Baseball Co. v. New Hampshire, Ins. …Continue Reading