Were Broker/Carrier Liable for Underinsurance?
Kim Clark’s home was damaged by a fire. Clark failed to advise her insurance agent or broker about an addition to her home which increased its square footage by approximately fifty percent. As a result of the fire, Clark claimed losses to her home and personal property far exceeded her insurance coverage limits which did not account for the unknown increased square footage of the renovated home.
Clark filed suit seeking damages against Urbanski Insurance Agency, Inc. alleging it negligently procured insufficient insurance coverage for the home and against Preferred Mutual Insurance Company claiming it was vicariously liable for Urbanski’s alleged negligence.
Before the Court were several motions. PMIC and Urbanski moved for summary judgment dismissing Clark’s complaint and their respective cross-claims. And Clark moved for summary judgment seeking an order that Urbanski was acting as an agent for PMIC
Insurance agents have a common-law duty to obtain requested coverage for their clients within a reasonable time or inform the client of the inability to do so; however, they have no continuing duty to advise, guide or direct a client to obtain additional coverage. And, as to negligence claims directed against an insurance broker, a plaintiff must establish that a specific request was made to the broker for the coverage that was not provided for in the policy. Put simply, Clark’s common law negligence cause of action against an agent or broker could not avoid summary judgment absent a triable issue of fact that Clark made a specific coverage request and, if the agent or broker could not procure such coverage, they so advised the client.
Alternatively, Clark could establish that she was owed a heightened duty of advisement by an insurance agent or broker if she established the existence of a special relationship. To establish a special relationship — and thereby impose a heightened duty upon agents/brokers — a plaintiff must establish that : (1) the agent received compensation for consultation apart from payment of the premiums; (2) there was some interaction regarding a question of coverage, with the insured relying on the expertise of the agent; or (3) there was a course of dealing over an extended period of time which would have put objectively reasonable insurance agents on notice that their advice was being sought and specially relied on.
Applied here, both Urbanski and PMIC met their respective prima facie burdens establishing their entitlement to judgment as a matter of law that they neither breached any common law duty owed to Clark nor did a special relationship exist warranting imposition of a heightened duty.
For instance, both Urbanski and PMIC established that no specific request for coverage was made and not provided for by Urbanski or PMIC. Thus, neither Urbanski nor PMIC had a continuing duty to advise or guide Clark to obtain additional coverage. And Clark failed to raise a triable issue of fact in response.
Additionally, Urbanski and PMIC established that no special relationship existed. For instance, both established that no compensation was received from Clark over and above premium payments. As such, there was no basis to impose a special relationship.
Clark testified that she never discussed with Urbanski or PMIC concerns about raising her policy limit coverage or questioned the need for additional coverage. As such, Urbanski and PMIC established that no special relationship existed beyond that of the common-law duty to obtain requested coverage.
Not only did Clark fail to make a specific request for additional coverage or seek a review of the adequacy of her existing coverage, she failed to advise Urbanski or PMIC about an addition to her home which increased its square footage by approximately fifty percent. Ultimately, no requests for policy changes were made which would have triggered an underwriting review of the adequacy of Clark’s policy. As such, Urbanski and PMIC established that no special relationship existed on the basis of the parties’ course of dealing so as to make it objectively reasonable that their advice was being sought and relied upon by Clark. Such lack of initiative or personal indifference could not qualify as legally recognizable or justifiable reliance on Urbanski’s or PMIC’s expertise..
That Clark did not read her yearly insurance policies or declaration pages and had no special training in procuring insurance coverage was of no moment. Put simply, insureds are in a better position to know their personal assets and abilities to protect themselves more so than general insurance agents or brokers, unless the latter are informed and asked to advise and act.
Clark failed to raise a triable issue of fact. Clark offered an affidavit from Paul Chisholm who claimed 34 years of experience in the insurance industry. Chisholm opined that “when an insurance agency purchases a book of business from another agency, the purchasing agency has a duty to ensure that it is procuring the proper coverage for the inherited clients [and that i]t is contrary to standard accepted practices in the field to rely exclusively on the conduct of the prior broker.” But Chisholm provided no basis either in the record or in industry standards supporting his opinion that such a heightened duty upon insurance agents and brokers was owed to insureds. As such, Chisholm’s expert opinion was conclusory, speculative, and therefore insufficient to create a triable issue of fact.
Urbanski and Defendant PMIC’s respective motions for summary judgment were granted in their entirety and Clark’s complaint and any cross-claims interposed against and between Urbanski and PMIC were dismissed. And Clark’s cross-motion for summary judgment was rendered academic.