Insurance Agent Negligence
An insurance agent can be negligent when they fail to advise their clients of the appropriate coverage options for them or for misinforming their client as to the extent or nature of the coverage they are purchasing. When, due to this negligence, the client lacks appropriate insurance coverage and is left out of pocket, the insurance agent that the insurance was purchased through can be sued. If successful, the insurance agent will provide the client with the cover the client should have been provided by their insurance, by compensating the client for losses they have incurred due to their lack of insurance or their inadequate insurance coverage.
Insurance agents often claim, in their defense, that they are 'mere order takers' and are not liable for the failure of the client to purchase appropriate insurance or the failure of the insurance company. To argue against this defense, it must be shown that the insurance agent was more than a mere order taker, but was instead an agent for their client, providing their knowledge and expertise to a trusting client to allow the client to make an informed decision. An insurance agent is a trained professional who clients rely upon and insurance agents have a fiduciary duty to act in the best interests of their clients. To avoid breaching this duty, an insurance agent must act in the best interests of their client, ensure that the client's property is properly protected with the adequate coverage and provide advice to the client on the appropriate cover for their needs.
An insurance agent can be sued for ordinary negligence where their conduct has fallen below the standard required for their profession. For example, if an insurance agent has failed to file paperwork, or has filed it improperly, and this negligence led to losses being suffered by the client, the agent can be held liable for those losses. There is also a duty to notify the insured when their coverage is terminated.
An insurance agent also has a duty to inform their client of the types and amounts of insurance needed for their requirement, whether it be home, business, automotive, health or life insurance. Informing their client of their insurance options available to them is an integral part of the agents duty to recommend the appropriate coverage and failure to do so will result in a breach.
As the agent of the client, an insurance agent has a duty to ensure that the client receives the correct coverage, whether this be coverage specifically requested by the client or merely coverage that someone in the clients position would typically need. If an insurance agent has made a mistake and has not insured their clients for the proper coverage, or the right risk, they can be in breach of the duty they owe to their client.
A lawsuit against the insurance agent can recover the difference between the amount the client is out of pocket due to their current insurance coverage and the insurance coverage they should have been provided. A lawsuit against an insurance agent for negligence also has the potential to recover any other losses the client has suffered due to the agent's negligence.