When you purchase insurance coverage through an agent, you trust that the agent will ensure you have the exact coverage you pay for. But what happens if you go to file a claim against your insurance and find that you don’t actually have the coverage your agent claimed you did?
If this happens to you, you shouldn’t be stuck paying thousands of dollars out of pocket. Fortunately, you have recourse — and your best option is usually to file a liability claim against the agent. Here’s a closer look at what you need to know about insurance agent liability claims in Florida.
The Role and Responsibilities of an Insurance Agent
Insurance agents play a critical role in the insurance ecosystem. They have a more thorough knowledge of insurance than the average person, making them uniquely equipped to listen to a customer’s needs and select a policy accordingly.
Because insurance agents are so important when it comes to protecting homes, vehicles, health, and more, they are obligated to act in the best interests of their clients. These are some of the most important duties insurance agents have:
Explaining Policy Terms and Coverage
When you’re considering taking a new prescription medication, your doctor is responsible for explaining the way the medication works, what it treats (and doesn’t treat), and what side effects you may encounter.
When you’re looking for an insurance policy, an insurance agent’s responsibilities are similar. Your agent must explain what coverage is included in the policies you’re considering and make sure you understand the terms you’re agreeing to.
Obtaining Insurance Coverage (and Maintaining It)
Once you’ve made your choice of insurance, your insurance agent must procure the requested insurance policy. They also must make sure you remain safely insured for the duration of the policy. If any issues arise or your coverage is interrupted for any reason, your agent or broker must immediately inform you.
Helping Clients Choose the Right Coverage
Insurance agents don’t always have the duty to tell clients how much insurance coverage they should have, but they should at least take reasonable care to ensure the client is choosing coverage appropriate to their situation.
However, if an insurance agent has a “special relationship” with a client, they may have a greater duty of care. These are a few examples of when a special relationship between an agent and a client may be established:
- The agent is being paid for both their advice and for selling insurance
- The agent advertises themselves as an expert
- The agent and client have an established, long-term relationship
- The client is relying on the agent’s expertise
In some cases, an insurance agent who has established a special relationship with a client may have a fiduciary duty, meaning they are obligated to act only in the client’s best interests. This area of the law is not always straightforward.
If you aren’t sure how to determine whether your insurance agent has a fiduciary duty toward you, our team is here to help.
Insurance Agent Duties and Obligations
Often, insurance agents must balance the interests of their clients with the interests of the companies they work for. However, whether they have a fiduciary duty or not, insurance agents in Florida have the following legal obligations:
Exercise Reasonable Care in Securing Coverage
One of an insurance agent’s most important duties is to secure the insurance coverage a client has specifically requested. Agents should make sure they clearly understand everything a client wants in a policy.
Keep Clients Informed
If the insurance agent fails to procure the requested coverage (or if any problems arise), they must inform the client as soon as possible. Likewise, as soon as the agent has secured the coverage, they should let the client know.
Review Policies
As an additional safeguard, an insurance agent has the obligation to review the policy once it has been purchased. During this review, they must confirm that the policy is in line with what the client requested.
Help With Claims
Most people think of insurance agents as people who just sell policies. That’s part of the job description, but insurance agents should also assist with claims by doing the following:
- Explaining the claims process
- Answering questions
- Ensuring the client understands how the claim may impact their rates
- Helping fill out paperwork
- Submitting the claim to the insurance company
Insurance agents should also keep clients updated throughout the claims process.
Examples of Insurance Agent Negligence or Misrepresentation
Insurance agents should exercise reasonable diligence when working with a client. If they don’t, you may be able to file a negligence claim. These are some of the circumstances where you might consider legal action against a negligent insurance agent:
The Agent Didn’t Inform You That They Failed to Procure Coverage
If an insurance agent is unable to procure coverage, they must inform you immediately so you can decide on alternative insurance coverage. Similarly, if the insurer is terminating coverage, your insurance agent has the duty to tell you as soon as possible.
The Agent Procured Coverage, but Not the Coverage Requested
In some instances, negligent insurance agents will purchase one type of insurance you requested but not the other. For example, imagine you want to purchase homeowners’ insurance. The standard policy does not include flood insurance, but you clearly state that you want flood insurance added to your policy.
If your insurance broker purchases a home insurance policy but doesn’t add coverage for flooding, they have acted negligently. In the event of a flood, you may be able to sue the agent for the cost of home repairs.
The Agent Kept Your Premiums Instead of Paying the Insurer
Whether accidental or intentional, this is a serious breach of duty. Insurance agents have a legal duty to apply your premium payments to your policy. If they don’t, they may be held liable.
The Agent Didn’t Pass on Communications From Your Insurer
Your insurance agent is the liaison between you and your insurance company — and that goes beyond collecting premiums from you and paying them to the insurer. If your insurance company relays important information and your agent doesn’t pass it on, they have acted negligently.
The Agent Sold You a Policy With an Insolvent Insurer
Insurance agents must make sure that any insurer they connect you with has the financial ability to pay out a claim. If they don’t, they might be held liable for your losses.
The Agent Misrepresented the Kind of Coverage You Received
Transparency is critically important in the world of insurance. If your insurance broker tells you you’re getting a type of coverage that’s not actually in your policy, they have violated Florida law as well as their duty to you.
Insurance Agent Liability Claims
If your insurance broker or agent has made a serious error, they may be held liable. However, in order to win an insurance agent liability case, you (or your attorney) must prove the elements of negligence as they relate to insurance:
The Insurance Agent Owed You a Duty of Care
If you were working with a licensed insurance broker or agent, this should be relatively easy to prove. Whether a special relationship is established or not, insurance brokers and agents have a duty to procure insurance at the insured’s direction.
They Breached That Duty
Your attorney also must prove that your agent didn’t fulfill their duty to you. For example, if you have an email from your broker confirming they purchased a policy for you and no such policy exists, that’s clear evidence that the broker breached their duty of care.
Their Breach of Duty Caused Harm
To have a successful negligence-based claim, you must prove that you suffered harm because of the broker’s actions. For instance, if your home was destroyed and you have no homeowners’ insurance because of an insurance broker’s oversight, you have suffered harm — you have no home and no funds to rebuild the one you lost.
You Have Damages to Collect
In this context, “damages” refers to “compensation for losses.” Going off the example above, your attorney could argue that you’re entitled to the cost of rebuilding your home.
Seeking Compensation From an Insurance Company
If you have suffered losses because an insurance agent was negligent (or if they deliberately defrauded you), an insurance agent liability claims lawyer may be able to help.
An attorney can advocate for you to receive compensation. Often, they will try to recover the monetary benefits you would have received if the agent had purchased the coverage you asked for (and thought your insurance broker had procured).
For example, imagine you asked your agent to procure business interruption coverage that will pay you up to $100,000 if your business is disrupted. Your office is destroyed by a fire, so you are temporarily unable to generate any income. You don’t learn of your agent’s failure to procure the policy until you go to file a claim.
In this instance, an attorney focusing on insurance agent liability claims in Florida may be able to help you recover damages of at least $100,000 — the payout you would’ve received had the agent actually purchased your policy.
Sometimes, your lawyer may also seek compensation for intangible, non-economic losses like inconvenience or emotional distress. An attorney well-versed in the insurance industry can discuss your case with you and give you an idea of what compensation you may be able to recover.
Protecting Yourself as an Insurance Agent
Clients aren’t the only ones who need to understand insurance agent liability claims. If you are an insurance broker or insurance agent, you should take steps to protect yourself.
Even if you’re meticulous in your work and think you would never make an error, it’s still wise to be proactive about protecting yourself and your business. These are a few suggestions:
Purchase Errors and Omission Insurance
Errors and omissions (E&O) insurance is a wise investment for any insurance broker. Every businessperson runs the risk of making an error. However, because insurance agents and brokers deal with other people’s money, their errors tend to be more costly than most.
E&O insurance is a safety net that can protect you if you make a mistake. It typically will cover both the cost of legal representation and any compensation you’re ordered to pay the plaintiff.
Stay on Top of Industry Trends
The more educated and up-to-date you are regarding insurance industry trends, the more effective you’ll be as an insurance agent. Learning all you can about changes in the industry isn’t a guarantee that you’ll never make a mistake, but it may lessen your chances of making decisions or suggestions that aren’t in a client’s best interests.
Consult an Insurance-Savvy Attorney
The above general suggestions are good places to start, but a lawyer with a thorough understanding of the insurance industry can help you develop a plan to protect yourself, your business, and your assets from lawsuits.
FAQ
What Happens When an Insurance Agent Makes a Mistake?
If an insurance agent makes a mistake, it can result in substantial financial harm to their clients. If you’ve been harmed by an insurance agent’s mistake, you may be able to file an insurance agent liability claim to receive compensation.
An attorney experienced in insurance law can discuss your situation and tell you if your claim is likely to be successful.
How Do You File a Complaint Against an Insurance Agent in Florida?
If you’ve been harmed by an insurance agent’s negligence or willful misconduct, you can file a complaint with the Florida Office of Insurance Regulation. If you suffered major financial losses because of the agent’s actions, it’s also a good idea to consult an attorney familiar with insurance agent liability claims.
What Is the Role of the Insurance Agent in Claims?
An insurance agent does more than help clients select policies. If you need to file a claim, your insurance agent can offer guidance and support. For example, if your home has been damaged in a hurricane, your insurance agent may offer tips on documenting damage and choosing supporting evidence to attach.
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