Under Florida law, an insured may sue their agent for negligence, breach of contract, breach of fiduciary duty, and misrepresentation, as the circumstances permit, when there is no coverage or inadequate coverage procured for the loss sustained. Generally, under Florida law, an insurance broker undertaking to procure insurance for an insured is required to use reasonable skill, care, and diligence, and may be liable to an insured resulting from the negligent failure to obtain coverage that is specifically requested or clearly warranted by the insured’s express needs.
There are essentially three typical situations in which an insurance broker may be liable to an insured, which I like to remember as the “Three A’s,” and include circumstances in which an insurance broker fails to: (a) procure Any coverage; (b) procure Adequate coverage; and (c) properly Advise and inform the insured.
Situation 1 (No Insurance): This situation involves an insurance broker that simply fails to procure any insurance, or any specific type of insurance, requested by the insured. Examples include, but are not limited to, situations where the insurance broker:
- Fails to procure any insurance policy, pay the premium received from the insured, or submit a renewal, resulting in coverage never being written or existing coverage to lapse.
- Procures a policy that does not include a particular type of coverage for a particular loss or risk that the insured requested and the broker promised (but failed) to obtain.
- Fails to procure a policy that identifies and includes all necessary and requested parties as named insureds or additional insureds.
Situation 2 (Inadequate/Not Enough Coverage): This situation occurs when the insurance broker procures some coverage, but the amount of coverage obtained is inadequate and insufficient to cover the loss or indemnify against a particular risk requested by the insured.
Situation 3 (Duty to Advise and Inform): The insured’s agent may be liable for failing to advise the insured of the existence and availability of particular insurance, including the availability and potential need for obtaining higher limits, as well as to advise about the availability of the requested or needed coverage in the marketplace. The insurance broker has a duty to advise the insured of the best coverage available at the best available price. The insurance broker may be liable for failing to provide an explanation to the insured that different coverage was required or procured than what the insured requested. Thus, a broker has a duty to inform and explain the coverage secured at the insured’s direction, any facts that may materially affect the coverage requested or secured, and to advise the insured of any unilateral changes made by the broker in the coverage requested. When an insured reasonably relies upon an insurance agent/broker’s claimed expertise and advice, or if the facts reflect that the broker and insured had a “special relationship,” liability may be based upon the negligent failure to properly advise the insured as to coverage.
If you find yourself having no coverage, or insufficient coverage for a loss that you requested or believed was covered, you should consult with experienced insurance attorneys like Haber Law to explore whether such lack of coverage was due to an insurance broker or agent’s failure to procure coverage or advise of material facts regarding the availability or unavailability of coverage.
Lauren Fallick is a partner with Haber Law with over 10 years of practicing complex business and civil litigation. She also has extensive experience in construction defect litigation, insurance coverage litigation, business and partnership disputes, real estate disputes, and professional liability litigation.