The duties of an insurance coverage agent to the policyholder will differ relying on state regulation. Yesterday’s publish a few Michigan protection case, Order and Bind Insurance coverage Earlier than the Loss—Business Coverage Covers Water Injury Underneath Drain Backup Endorsement, famous that there was additionally a difficulty with insurance coverage agent negligence. This would be the second publish in a 12 months about Michigan insurance coverage agent regulation, and I’d recommend that these learn Insurance coverage Agent Negligence—What Are the Guidelines and Duties of Insurance coverage Brokers in Michigan?
Underneath Michigan regulation, an insurance coverage agent has an obligation to obtain the insurance coverage protection particularly requested by the insured. Nonetheless, an agent typically doesn’t have an affirmative responsibility to advise the insured concerning the adequacy of protection except a “particular relationship” exists. I wrote a few “particular relationship” in Insurance coverage Agent Duties Rely on Particular Relationships. Underneath Michigan regulation, a particular relationship can come up if:
(1) the agent misrepresents the character/extent of protection,
(2) the insured makes an ambiguous request requiring clarification,
(3) the insured makes an inquiry which will require recommendation, and the agent offers inaccurate recommendation, or
(4) the agent assumes a further responsibility by specific settlement or promise.
Policyholders should suppose that the regulation is lacking one thing if knowledgeable who wants a license to promote insurance coverage can be held accountable for errors provided that a particular relationship exists. This was why I wrote Insurance coverage Brokers Are Extra Than Your Waitress At Denny’s.
Within the information of the case at hand, 1 the court docket discovered no proof that any of those particular relationship circumstances existed between Opera Block and Kiebler Insurance coverage to create an obligation to advise on protection adequacy. The proof confirmed Kiebler Insurance coverage procured the precise protection modifications requested by Opera Block’s consultant Fuller on February 5, 2019, together with the best water backup protection supplied by Auto-House owners on the time. Whereas Opera Block argued Kiebler ought to have insured the 5 constructing addresses as separate areas relatively than 3 areas, it offered no proof that Auto-House owners would have issued such a coverage. Due to this fact, Opera Block failed to ascertain a real factual subject that Kiebler Insurance coverage breached any responsibility owed to Opera Block, so abstract disposition for the insurance coverage agent Kiebler was correct.
The underside line is that the court docket utilized Michigan’s restricted guidelines concerning an insurance coverage agent’s responsibility to advise and located the proof didn’t help Opera Block’s negligence claims in opposition to its unbiased agent, Kiebler Insurance coverage. The agent procured the precise protection requested with none particular relationship arising that may require advising on protection adequacy or the hole in protection.
Circumstances in opposition to insurance coverage brokers are sometimes troublesome to win. Policyholders usually are not danger administration professionals, nor do they perceive how advanced insurance coverage insurance policies usually have gaps of protection, which an insurance coverage agent is within the place to clarify and at the least alert the policyholder. As long as courts deal with insurance coverage brokers as waitresses at Denny’s, the regulation helps insurance coverage brokers avoiding the obligations their license gives for them and what they’re taught to do and know.
Thought For The Day
Duty equals accountability equals possession. And a way of possession is probably the most highly effective weapon a staff or group can have.
—Pat Summitt
1 Opera Block Properties v. Auto-House owners Ins. Co., No. 365213, — N.W.3d —, 2024 WL 3907171 (Mich. App. Aug. 22, 2024).