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Florida Insurance Agent/Broker Claims

(August, 2014)

When is Your Insurance Agent Responsible for Failure to Obtain Insurance Coverage?

You thought you had insurance coverage on your claim, but the insurance company has just informed you that there is a policy exclusion that bars it.  Even though you had responsibly paid your insurance premiums for years.  Your insurance broker, who obtained the policy, explains to you that, in fact, your claim is excluded under the policy.  When you ask why the coverage was not obtained, or you were not told about this exclusion before, the broker tells you that you neither requested nor asked about this type of coverage.  The broker further claims that, under Florida law, a broker has no duty to explain your insurance needs to you, and cannot be responsible (liable) for failing to obtain insurance you did not request.  What do you do?  Are you just out of luck?  Not necessarily.

As a general proposition, it is true that an insurance broker (usually an independent broker working as your agent to obtain insurance for you; but sometimes an agent, who generally represents a carrier) has no duty to advise the insured as to the insured’s insurance needs, or as to availability of particular coverage.  This means, among other things, that the broker cannot be held liable for failure to procure insurance that was not specifically requested or otherwise clearly warranted by the insured’s expressed needs.  Does this mean that the broker’s responsibility is limited to the ministerial task of assisting you in properly filing out the insurance application?  Does your broker have any obligation beyond seeing that you accurately write down what you want for insurance?  That answer depends very much on the nature of the relationship between you and your broker, including what you asked and what you were told.

Florida Courts have long recognized that insurance brokers owe a fiduciary duty of care to the insured.  This means that a broker has a duty to inform and explain the coverage secured at your direction, and, in the event the broker made unilateral changes in the coverage, to advise you of those changes.  In addition to the duties imposed by the fiduciary relationship, Florida law imposes a separate duty of care requiring the broker to use reasonable care in the procurement of requested insurance coverage.  Under Florida law, brokers will frequently have both a fiduciary and common law duty of care to their customers that may, depending on the circumstances, give rise to an enhanced duty to affirmatively make recommendations to the insured on the specific types and amounts of insurance coverage reasonably and prudently needed to meet the insured’s complete insurance needs.

But is the broker ever responsible for more than simply giving you the coverage you asked for or what your “expressed needs” required?  A recent case from the United States District Court for the Southern District of Florida addressed this question, noting that while it had not been able to locate Florida case law directly on point, a well developed body of case law throughout the country established an exception to the general rule of “no duty to advise”.  That exception arises, the court found, “when an insurance broker encourages and engages in a ‘special relationship’ with its client, thereby triggering an enhanced duty of care to advise the client about the amount of coverage prudently needed to meet its complete insurance needs.”  The court identified the following case examples of such a “special relationship”: 

  • Where the agent misrepresented the nature of the coverage being offered or provided, and the insured justifiably relied on that representation in selecting the policy;
  • Where the agent voluntarily assumed the responsibility for selecting the appropriate insurance policy for the insured (by express agreement or promise to the insured);
  • Where the agent held himself out as having expertise in a given field of insurance being sought by the insured, and the insured relied upon that expertise;
  • Where the agent or broker exercised broad discretion to service the insured’s needs, and received compensation above the customary premium paid for the expert advice provided; and
  • Where the agent was intimately involved in the insured’s business affairs, or regularly gave the insured advice or assistance in maintaining proper coverage.

What is important in this analysis is that it is very factually dependent; that is, if the “special
relationship” argument is raised, the courts may be much less likely to summarily dispose of the case without a more detailed analysis and resolution of factual disputes concerning issues such as:

  • representations by the broker about his or her expertise;
  • representations by the broker about the breadth of the coverage obtained;
  • the length and depth of the relationship;
  • the extent of the broker’s involvement in the client’s decision making about its insurance needs;
  • information volunteered by the broker about the client’s insurance needs; and
  • payment of additional compensation for advisory services.

Don’t accept a simple explanation that may well be wrong.  Even if you don’t have
coverage, you may have the ability to make a claim against a broker who knew or should have known your insurance needs, but failed to see that you were properly covered.  If you think your broker may have done this to you, call Saady & Saxe, P.A. and ask to speak to Dan Saxe.             

Daniel L. Saxe is a partner in Saady & Saxe, P.A., whose practice areas include malpractice claims concerning insurance agents and carriers. He can be reached at dan@saadyandsaxe.com or 813-909-8855.


[1] Tiara Condominium Association, Inc. v. Marsh, USA, 2014 U.S. Dist. LEXIS 3677 (S.D.Fla., January, 2014).

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