The duties of an insurance coverage agent to the policyholder will differ relying on state regulation. Yesterday’s put up a few Michigan protection case, Order and Bind Insurance coverage Earlier than the Loss—Industrial Coverage Covers Water Injury Beneath Drain Backup Endorsement, famous that there was additionally a difficulty with insurance coverage agent negligence. This would be the second put up in a 12 months about Michigan insurance coverage agent regulation, and I might recommend that these learn Insurance coverage Agent Negligence—What Are the Guidelines and Duties of Insurance coverage Brokers in Michigan?
Beneath Michigan regulation, an insurance coverage agent has an obligation to acquire the insurance coverage protection particularly requested by the insured. Nevertheless, an agent typically doesn’t have an affirmative obligation to advise the insured concerning the adequacy of protection until a “particular relationship” exists. I wrote a few “particular relationship” in Insurance coverage Agent Duties Rely on Particular Relationships. Beneath 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 that will require recommendation, and the agent offers inaccurate recommendation, or
(4) the agent assumes a further obligation by categorical settlement or promise.
Policyholders should suppose that the regulation is lacking one thing if an expert who wants a license to promote insurance coverage could 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 info 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 provided by Auto-House owners on the time. Whereas Opera Block argued Kiebler ought to have insured the 5 constructing addresses as separate places relatively than 3 places, it introduced no proof that Auto-House owners would have issued such a coverage. Due to this fact, Opera Block failed to determine a real factual difficulty that Kiebler Insurance coverage breached any obligation 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 relating to an insurance coverage agent’s obligation to advise and located the proof didn’t help Opera Block’s negligence claims in opposition to its impartial 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.
Instances in opposition to insurance coverage brokers are sometimes troublesome to win. Policyholders will not be 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 very 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 essentially 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).