Specialized Insurance Brokers Are Held To A Higher Standard Of Care – Murray v. UPS Capital Ins. Agency, Inc.
Few law firms are willing to take on insurance companies when an insurance claim has been denied, and even fewer are willing to file lawsuits against insurance brokers because the duties of these insurance sales people to you, the potential insureds, are shocking low. However, California law has some exceptions when it comes to the duties of insurance brokers. And the California Court of Appeals just expanded one of the exceptions which has arguably expanded liability against specialized insurance brokers for failure to affirmatively explain coverage to prospective insureds.
It has long been established and accepted in California that insurance brokers have limited duties. “Generally speaking, California law is well settled as to the limited duty of insurance brokers, which is only to use reasonable care, diligence, and judgment in procuring the insurance requested by an insured.” Travelers Property Casualty Co. of America v. Superior Court (2013) 215 Cal.App.4th 561, 578-579; Jones v. Grewe (1987) 189 Cal.App.3d 950, 954-955. However, California court have recognized three exceptions to the general rule outlined in the Travelers case and Kitzpatrick v. Hayes (1997) 57 Cal.App.4th 916: “(a) the agent misrepresents the nature, extent or scope of the coverage being offered or provided [ . . . ], (b) there is a request or inquiry by the insured for a particular type or extent of coverage [ . . . ], or (c) the agent assumes an additional duty by either express agreement or by ‘holding himself out’ as having expertise in a given field of insurance being sought by the insured.” Fitzpatrick, supra, 57 Cal.App.4th at p. 927.
The California Court of Appeals has now expanded upon the third exception to the “limited duties” rule in Murray v. UPS Capital Ins. Agency, Inc., finding that a broker who hold itself out as having special expertise is held to a higher standard, and in fact has a “heightened duty” to present and explain insurance options to their customers. This heightened duty includes the affirmative duty to advise, finding “Because an insured is relying on the agent’s expertise, the duty to advise logically extends to relevant coverage information within the agent’s “expertise in a given field of insurance being sought by the insured.” See Fitzpatrick, supra, 57 Cal.App.4th at p. 927. The Court concluded that “evidence of specialization at a minimum creates a presumption the agent/broker anticipates their clients will rely on their acknowledged expertise and supports courts imposing an extended duty.”
What this means is that if you, or more likely your company has used an insurance broker to procure insurance for specialized needs, and the broker held itself out as having special expertise in such insurance matters, but then failed to explain coverage, and your claim was denied because you did not have a particular coverage you would otherwise expect to have, your broker may be liable for negligence in the selling of improper insurance to you or your company. Because insurance brokers carry Errors & Omissions coverage, you can seek to recover for you or your business against the broker and their insurance policy.
Find Legal Counsel Now
Act quickly if you believe you have solid grounds for a broker liability claim based on a failure to advise you or your company as to coverage. If you believe an insurance broker failed to arrange an appropriate insurance policy that led to significant economic damages, you have the right to file a lawsuit against the broker for broker liability. The team at the Winthrop Law Group, PC, is ready to accept new clients for broker liability claims in Newport Beach. Contact us today to arrange a consultation with an experienced Newport Beach broker liability attorney.