If the agent fails to obtain specific coverage that the insured requested and that the agent said would be provided by a particular policy, a court – applying the common-law doctrine of equitable reformation – may in effect re-write the insurance contract to include the requested coverage. She acts on Allstate’s behalf, and her actions can bind Allstate. For example, an Allstate agent is, as a matter of law, an agent of Allstate (the same applies to a State Farm or Farmers agent). She is considered to be acting for the carrier, and her actions can bind the carrier. People often think the terms “insurance agent” and “insurance broker” are synonymous and interchangeable, but they are not.Īn insurance agent is an agent of the insurance company she represents.
We provide authority from several jurisdictions, which will provide the reader with an informed starting point for further analysis and research. This article is an introduction to the key issues that an attorney should consider when evaluating or prosecuting a negligence case against an insurance agent or an insurance broker. The professional conduct of insurance agents and brokers is governed by the laws of each state, and we have not exhaustively researched each state’s laws for each of the concepts that we discuss in this article.
The challenge in these cases is proving the existence of a duty because in most jurisdictions insurance agents and brokers have only limited duties to their clients. To prove professional negligence against an insurance agent or broker, the client must prove the basic elements of negligence – duty, breach, causation, and damages. Insurance agents and insurance brokers can be held accountable for performing their professional duties negligently, but only in limited circumstances.
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