August 17, 2022 – It’s 2020 — a young couple with one child are working out of their apartment during the pandemic and want to buy a house. They hire a realtor who finds them a small house with a nice yard. The couple takes out a loan and closes racing.

Two years later, they have twins. And, no longer at home, both parents take new jobs, miles away from the home their master helped them buy. They need a big house in a different city.

Although real estate agents and brokers are accused, it’s usually not for failing to anticipate their clients’ future housing needs. They only seriously consider suing a real estate agent because they failed to predict how the landlord’s subsequent developments would affect their client’s future housing needs.

In contrast, insurance agents and brokers who help individuals and businesses purchase insurance are charged; And it’s often an inability to predict the future — an inability to predict what types and amounts of insurance their customers will need down the road.

• “My agent messed up: the auto insurance liability limit was only $250,000 per person. I hit the young surgeon and she fell off her bike and broke her surgeon’s hand.”

• “My agent messed up: When I wrote the letter saying my neighbor was selling drugs, I didn’t know it was just Amway. Why didn’t my insurance agent tell me I needed a defamation policy?”

It is difficult to predict the future accurately. As Hall of Fame catcher Yogi Berra said, “The future is not what it used to be.

Are lawsuits against insurance agents and brokers worth it? Normally, they are not. For example, the Texas Supreme Court in In the 1992 decision, May v. United Servs. In the 1987 California appellate decision, Jones v. Grewe, “neither the question of “adequate” coverage nor the assertion that the agent’s liability coverage is adequate can support a broad agreement.” “It makes the agent blanket insurance for the principal.”

In a 2018 New York court decision, Fox Paine & Co., LLC v. Houston Cas also cited California’s Jones v Grewe, which held that “absent special and exceptional circumstances based on the broker’s conduct or express or implied contract, the broker’s duty is limited to obtaining the coverage requested and there is no fiduciary relationship between the insurance broker and the customer. . . .”

Emphasizing the usually limited nature of an insurance agent’s duties, Murray v. The California Court of Appeals in UPS Capital Ins. Agency, Inc. As explained in 2020, “an insurance agent shall exercise only those duties inherent in any agency relationship, such as reasonable care, diligence, and judgment, in purchasing the insurance requested by the insured.”

This means that a person or business buying insurance cannot rely on their agent to accurately predict their future (or current) insurance needs. Rather, in most cases, the agent must be as good as the party seeking coverage.

An insurance buyer who tells their insurance agent about the specific risks they may face or the need to protect valuable assets is more likely to get the broader coverage or higher policy limits they need. But if you just tell your insurance broker that you need car insurance because you can’t drive without it. Homeowners insurance because your mortgage company insists on it; or business liability insurance because some clients won’t let you operate without it, you may not get the scope or amount of insurance coverage you expected.

Like every rule, the limited liability rule has exceptions. The main exceptions to the limited insurance agent and broker liability rule are that the agent or broker may be liable to the insured if:

(1) The agent misrepresents the scope of coverage being purchased for the policy; Or

(2) the holder requests or inquires about certain insurance coverage; Or

(3) The agent assumes that he has specific knowledge in the field of insurance sought by the insured.

Unless misrepresentation, separate coverage claims, or specialty claims are made in writing, these exceptions can be difficult to prove.

As discussed in the 2021 California Court of Appeals decision, Vulk v. State Farm General Ins. Co., simply asking for “best policy” or “full coverage” is not enough to satisfy a request for a specific type of coverage.

Similarly, an insurance agent may not be considered to have a particular area of ​​expertise based on a long relationship with the insured or a superior knowledge of insurance in general. Again, however, the more involved and communicative an insurance buyer — especially one who communicates by text, email, or mail — has a better chance of proving that the agent’s actions were expanded due to misrepresentations about the agent’s scope of coverage, a particular claim. Covers, or assumed knowledge.

For example, policyholders who require a specific type of coverage may be expanding the agent’s duties.

A 2020 California appellate decision, Murray v. Filed on UPS Capital Ins. Agency, Inc. The item was damaged in shipment. The claim was denied as the policy only covers serious loss and not damage caused by improper handling.

The court reversed the insurance agent’s summary judgment and allowed the case to proceed to trial because, among other things, the UPS agent pointed to UPS Capital as the industry’s recognized “go-to” broker for inland shipping. interests.

On the other hand, a case from Wisconsin shows how the agent’s performance is reduced when the insured shows little interest in the insurance. In a 1994 decision, Lisa’s Style Shop v. Hagen Ins. agency, the Wisconsin Supreme Court noted that the policyholder ignored his insurance needs until he suffered a loss.

The court then expressed its reluctance to expand the agent’s duties.

Imposing such an obligation on agents may “give them the opportunity to provide insurance after a loss by stating that they will purchase the additional coverage.” [or, in this case, increased their liability limits] “If it had been offered,” Lisa is now trying to do just that. In the six years before the fire, Lisa neglected his insurance needs. [Lisa’s president] She said she never reviewed Lisa’s policies. Also, she didn’t need advice or help. Now that Lisa has lost [Lisa’s president] You can’t say you would have bought more insurance. [the agent] She only advised her to do so.

When it’s time to buy insurance, consider taking some advice from the Wisconsin Supreme Court – discuss your insurance needs with your agent or broker. Don’t wait for bankruptcy or ask to start thinking about the insurance you need.

Erin Mindoro Ezra is a regular contributing columnist on insurance coverage for Reuters Legal News and Westlaw Today.

The opinions expressed are those of the author. They do not reflect the views of Reuters News, which is committed to integrity, independence and impartiality under the principles of integrity. Westlaw Today is owned by Thomson Reuters and operates independently of Reuters News.