Court Adjudicates Claims Against Insurance Company and Broker
James I. Ewart contacted Larry Darcey, who was an independent agent for the Allstate Insurance Company. for the purpose of purchasing a landlord insurance policy to cover a property in Smithtown. Darcey subsequently provided quotes for landlord insurance to Ewart and then left for vacation without binding coverage in place. Ewart did not select a policy and made no payment. Although Ewart knew that further actions were required to secure coverage, he believed that Darcey would complete them after he returned from vacation. But before Darcey returned, a fire damaged the property. Ewart tendered a claim to Allstate, which disclaimed coverage on the basis that no policy was in force on the date of the loss.
Ewart sued Allstate and Darcey to recover damages for breach of contract and negligence in failing to procure a landlord insurance policy for the property. Allstate and Darcey moved for summary judgment dismissing the complaint. Supreme Court granted the motion. Ewart appealed.
Generally, insurance agents have no continuing duty to advise, guide or direct a client to obtain additional coverage. However, an insurance agent or broker may be held liable under theories of breach of contract or negligence for failing to procure insurance upon a showing by the insured that the agent or broker failed to discharge the duties imposed by the agreement to obtain insurance, either by proof that it breached the agreement or because it failed to exercise due care in the transaction. The appellate court found that Allstate and Darcey established that Darcey and Ewart did not reach an agreement, as they did not discuss the amount of coverage or the cost of a landlord insurance policy, among other things. In opposition, Ewart failed to raise a triable issue of fact.
An insurance agent or broker has a common-law duty to obtain requested coverage for a client within a reasonable amount of time, or to inform the client of the inability to do so. Here, Allstate and Darcey established that Darcey communicated multiple quotes to Ewart whose failure to respond demonstrated a lack of initiative or personal indifference that resulted in a failure to obtain coverage. In opposition, Ewart failed to raise a triable issue of fact.
The appellate court affirmed the order of Supreme Court that dismissed Ewart’s complaint against Allstate and Darcey.