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Insurance Law

: INSURANCE LAW NOTES

Fiduciary Duties of Insurance Agents

By Richard T. Victoria

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Frequently, after a claim is denied, policyholders turn to their agents and say, "I didn't know anything about insurance. That's why I gave you all of my information and told you, 'Get me what I need."' Sometimes, these allegations lead to breach of contract and/or negligence claims against an agent for failure to procure insurance or to claims against an insurer for failing to provide what has been promised in the policies. However, at least one court has recently recognized that a claim for breach of fiduciary duty might be viable against the agent, even if such a claim cannot be made against the insurer.

Though only a decision addressing preliminary objections to a complaint, the Court of Common Pleas for Lackawanna County held, in Decker v. Nationwide Ins. Co. and Robert G. Turano, 06 CV 2119 (C.P. Lackawanna, June 5, 2007), that:

it is inappropriate to consider the insurance company and the insurance agent separate entities for purposes of evaluating whether [the policyholder] has a viable claim for breach of fiduciary duty against [the agent]. ... We consider it important to determine the level of involvement [the agent] had in advising [the policyholder] of the appropriate insurance policy and product to fit their needs.

Thus, when making or considering a claim against an agent for failing to procure insurance, the policyholder should keep in mind the possibility that a fiduciary relationship may have been created and breached.

Full post as published by INSURANCE LAW NOTES on October 01, 2007 (boomark / email).