Insurance Agent and Broker Liability for Failure to Procure Necessary Coverage: Claims and Defenses

Insureds nearly always obtain coverage through insurance brokers or insurance agents. Sometimes the coverage obtained does not meet the policyholder's needs, either because client did not communicate its necessity to the insurance producer, or the producer did not meet the need.

Depending on the jurisdiction and the circumstances, the duty to procure should be analyzed in contract (either express or implied) or negligence. Under any scenario, the issue is whether the broker or agent undertook this duty. This duty can be established through explicit instruction by the insured or by the producer’s representations upon which the client reasonably relied.

Even if an insured establishes the insurer's duty, breach of that duty, and resulting damages, an insured does not necessarily have a clear path to liability. In nearly all instances, the insured has read or had the opportunity to read both the application and the policy. Such knowledge or imputed knowledge of the policy's contents can be a barrier to prevailing on a claim for failure to procure.

Listen as this panel of experienced insurance attorneys explores the complex web of varying duties and liabilities. The panel will guide attendees on how to counsel clients in the procurement process and what to do if coverage does not ultimately pay for losses.