Did Your Insurance Broker Lie to You?
Insurance is a complex field, and we reasonably rely on insurance brokers and other professionals to help us navigate different policy options. The insurance market is risky for individuals and businesses; parties seeking insurance are increasingly relying upon insurance brokers and agents to secure the policies they need. Brokers and agents are people, however, with competing interests and differing levels of competence. If you rely on an insurance broker to get you a specific policy and they fail to do so, only for you to find out years later when you (or your beneficiaries) need that coverage you thought you bought, you might find yourself in dire financial straits.
Brokers who misrepresent coverage and otherwise mislead customers can be held liable for the harm they cause. With the help of an experienced bad-faith insurance lawyer, you can get the benefits due to you under the policy as well as compensation for any additional harm done to you by the broker’s negligence.
Insurance Agents vs. Brokers
Despite a popular misconception, insurance “brokers” are not the same as insurance “agents.” Insurance agents are agents for the insurance company that they represent. They are acting for the insurance carrier, and their actions can bind the insurance carrier; if the agent fails to procure the specific coverage that they promised a customer, and the customer relies on the agent’s representations, a court might even be able to effectively rewrite the insurance contract to reflect the agent’s promises (for example, by requiring coverage of an event the policy language might exclude but the agent promised would be covered).
Insurance brokers, on the other hand, generally are independent professionals who work with multiple carriers. They are typically considered to be working on behalf of the insured, rather than the insurance carrier. They are more like a real estate agent. If an insurance broker misleads a customer, the broker (or their firm) is likely a proper defendant and may personally be liable for the damage they cause.
Insurance Brokers Owe Certain Legal Duties to the Insured
Although insurance brokers work on behalf of the insured, in some states, such as California, brokers do not owe a general duty to their customers when helping them pick out and purchase insurance policies. They cannot be held liable if, for example, they simply give customers bad advice on what coverage to procure, or if they fail to tell customers that they are not fully covered should certain events transpire. For example, if your broker helps you buy homeowner’s insurance and you find out after a fire that your insurance will not fully cover the cost of rebuilding your home, you might not have a claim against your broker for failing to tell you that your home was not fully covered.
When a broker deliberately tells you something that is not true, however, then you might have a claim. Brokers can be held responsible when they say something to a customer that turns out false, when they deliberately omit important information, or when a customer makes a specific request for coverage and leaves it to the broker to fulfill the request. A seasoned insurance broker negligence attorney can help you understand your rights with regard to insurance brokers and the circumstances under which they can be held responsible for damages you incur.
Insurance Broker Misconduct: Negligence and Fraud
Insurance brokers can be held liable for damages they cause through their misrepresentations, whether those misrepresentations arose through negligence or deliberate fraud. Brokers can be held liable in the following cases, for example:
Misrepresentation of coverage. Brokers cannot tell customers that policies cover something when they do not, and they cannot misrepresent the policy limits or other aspects of coverage. The insured is not responsible for verifying that the policy actually covers what the broker said it covers; that’s up to the broker. Selling inadequate or inappropriate coverage might also be actionable.
Failure to obtain requested coverage. If a customer asks a broker for specific coverage, such as coverage for certain events or up to a certain policy limit, the broker has a duty to either procure that coverage or tell the customer that the policy options do not include the requested coverage. The broker cannot simply facilitate the purchase of the policy and leave it to the insured to find out their policy excludes important things they asked for. Whether the broker can be held liable turns in part on the specificity of the request. Asking to be “fully covered” might not be enough to put the burden on a broker, while asking for “at least $1 million in coverage” creates a much stronger case.
Bad advice after claiming to be an expert. Although brokers do not owe a duty to customers to give perfect advice, if they explicitly claim to be an expert in a particular field of insurance, they are putting the burden on themselves to give good advice. If a broker claims to be an expert in some area and gives poor advice, causing the insured significant damages, the insured may be able to hold the broker personally liable for the losses they incurred.
Other negligence that harms the insured. Once a customer has utilized a broker to purchase a policy, the broker must follow through. If the broker submits inaccurate information on insurance forms, fails to actually purchase the policy requested, fails to send the properly signed forms around to the relevant parties, or otherwise fails to deliver the coverage they promised, they can be held liable for any damage caused.
Call a Bad Faith Insurance Law Attorney if Your Insurance Broker Intentionally or Negligently Misled You About Your Policy
If you have been misled by your insurance broker about your insurance policy, you have the right to stand up for yourself. You should not be left footing the bill for your medical costs and other expenses incurred because you were lied to. A seasoned insurance law attorney can help you hold negligent or fraudulent insurance brokers liable for the harm they cause.