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Can You Sue Your Insurance Agent for Their Mistakes?

Fri Apr 6th, 2018 on     Bad Faith Insurance,    

In Florida, insurance litigation disputes — often involving over-broad and unexpected policy exclusions — may lead one to question the liability of their insurance agent.  After all, if the insurance agent obtained the policy on your behalf, it’s possible that they have not satisfied their obligations and have somehow misled you into entering into an insurance agreement that did not adequately meet your needs.

In the event that your insurance agent failed to adhere to their duties, you may be entitled to sue them for negligence (and thereby recover damages for the losses over which your insurer has refused to extend coverage).  There are, of course, limits to consider — the law does not grant you an absolute right of action against your insurance agent.  Arguably, every dispute over a denied insurance claim is (to some degree) unexpected, or else you would not have agreed to it in the first place.

Duties Owed by the Insurance Agent

Insurance agents in Florida owe a number of duties to the insured (their client).  Pursuant to currently-applicable case law, they must:

  1. Exercise reasonable care in securing insurance coverage that the client has specifically requested, and notify the client as to any issues regarding its availability;
  2. Properly consider the explicitly-defined needs of the client when obtaining insurance coverage; and
  3. Inform and explain the coverage that has been secured at the client’s direction.

This can be difficult to take in all at once!  Consider the following example for clarity.

Suppose that you engage with an insurance agent to obtain comprehensive liability coverage for your retail business.  Eventually, you have to submit an insurance claim — it is promptly denied by the insurer, however.  As it turns out, the insurance agent obtained coverage that involved several significant policy exclusions, despite you requesting that there be no significant “blind spots” in coverage.  Depending on how specific you were regarding your coverage needs, you could ostensibly sue the agent for malpractice.

If you suffer a loss due to the negligence of your insurance agent, then the agent is required to pay damages equivalent to the full losses that you have suffered as a consequence of their particular acts.

Existence of a Special Relationship

Importantly, insurance agents have no general duty to advise their clients as to their insurance coverage needs.  Normally, for example, you cannot sue your insurance agent for failing to advise you as to how much coverage you should ideally secure (given your needs).

Still, the duty to advise clients of the type and amount of insurance coverage necessary to reasonably and prudently meet the client’s insurance objectives may activate under certain circumstances.  Florida courts (in recent court decisions, such as Tiara Condominium Association v. Marsh, USA, Inc.) have held that a duty to advise may be imposed on insurance agents who have established a “special relationship” with the insured client.

Whether a “special relationship” exists depends on a number of factors, such as the agent’s marketing efforts (i.e., holding themselves out as a professional advisor), their level of engagement with the insured, and whether they are being paid to provide additional advisory services.

Contact an Experienced Miami Bad Faith Insurance Attorney

Ver Ploeg & Lumpkin, P.A. is a Miami-based insurance litigation firm that has represented numerous clients in disputes with their insurers and insurance agents/brokers, including those that involve malpractice claims.  We believe that the key to success in litigation is the provision of personalized legal representation, and as such, we work closely with clients from the beginning of the litigation process to ensure that their case is fully evaluated and that their objectives are being considered throughout.

Call (305) 577-3996 to speak with an experienced Miami bad faith insurance attorney here at Ver Ploeg & Lumpkin, P.A.  Consultation is free and confidential.  We look forward to assisting you.

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