As a general rule, insurance brokers are not lawfully required to advise their customers of adequate coverage when procuring a policy—including appropriate limits, potential exclusions and more. However, in 1999, the Michigan Supreme Court defined special relationships between an agent and the insured that create a legal duty to advise customers on adequate procurement of insurance coverage. This relationship exists if:
- The agent misrepresented the nature or extent of coverage;
- The agent provides inaccurate advice to the insured’s inquiry;
- There is a request or inquiry by the insured for a particular type or extent of coverage;
- The agent assumes additional duty by holding themselves out as having expertise in a given field of insurance being sought by the insured.
Once the insurer represents a specific coverage as requested by the insured, the broker has a legal duty to procure that insurance policy. Upon this representation, the insured is not obliged to ensure the correct policy was procured. This is applicable to all future renewals with that broker.
Procurement of coverage claims are strongest when the circumstances creating it are in writing. Fabian, Sklar, King & Liss works with you to determine whether a special relationship with the insurance agent was created and, if so, whether there are sufficient grounds to sue.