Orlando Harmon
Insurance agents are generally considered to be acting for the insurance company they represent, and their actions can bind the company. While insurance agents do not have a general duty to advise their clients on their insurance coverage needs, they can be held accountable for negligence in the performance of their duties. If an insurance agent fails to adhere to their duties, you may be entitled to sue them for negligence and recover damages for any losses. For example, if an insurance agent fails to obtain specific coverage that was requested, a court may rewrite the insurance contract to include the requested coverage. However, it's important to note that the law does not grant an absolute right of action against an insurance agent, and there may be limitations depending on the jurisdiction.
| Characteristics | Values |
|---|---|
| Location | Florida |
| Grounds for suing | Misrepresentation, negligence, malpractice, bad faith |
| Circumstances | Misrepresentation during application, failure to adhere to duties, failure to obtain requested coverage, failure to advise on coverage, denial of claims without valid reason |
| Limitations | Statute of limitations, contributory negligence, special relationship |
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What You'll Learn
Misrepresentation or negligence
To prove professional negligence, the client must demonstrate the basic elements of negligence: duty, breach, causation, and damages. The duty of the insurance agent is to act or refrain from acting in a certain way. A breach occurs when the agent fails in their duty toward the client. Causation implies that the breach of duty directly caused harm to the client, which the agent should have foreseen. Finally, the client must have suffered damages (financial, physical, or emotional) as a result of the agent's breach of duty.
Examples of insurance agent negligence include:
- Failing to sign clients up for requested coverage options: Insurance agents should assess the client's needs and requests before selling them the appropriate amount and type of insurance.
- Misrepresenting the coverage included in a given policy: Agents should be well-versed in the policies they sell and should not mislead clients about their coverage.
- Misleading clients regarding the required application forms: During the insurance application process, agents must complete the forms accurately and truthfully. Misrepresentations could lead to claim denial by the insurer.
- Failing to notify the insurance company about a claim: If a client notifies their agent of a claim under their policy, the agent must inform the insurer.
- Failing to notify clients of financial issues facing the insurance company: Agents must inform clients if their insurer faces financial problems, such as insolvency.
- Failing to notify clients of policy cancellation: Agents should inform clients if their insurance contract is about to be canceled, especially if the insurer is canceling prematurely.
If you have suffered a loss due to the negligence of your insurance agent, you may be entitled to sue them for negligence and recover damages. These damages should place you in the same position you would have been in if the negligence had not occurred. For example, if an insurance agent's negligence resulted in additional living expenses or consequential damages, the agent may be liable to pay for those expenses.
It is important to note that the specific duties of insurance agents differ in each state's laws, and there may be limitations on your ability to sue your insurance agent. Therefore, consulting with a knowledgeable attorney is crucial to understand your legal options.
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Failure to advise
Generally, insurance agents do not have a duty to advise their clients on their insurance coverage needs. For example, you cannot sue your insurance agent for failing to advise you on how much coverage you should secure. However, under certain circumstances, a duty to advise clients on the type and amount of insurance coverage necessary to meet their insurance objectives may be imposed.
Florida courts, for instance, have held that a duty to advise may be imposed on insurance agents who have established a "special relationship" with the insured client. Factors that determine whether a special relationship exists include the agent's marketing efforts, their level of engagement with the insured, and whether they are being paid for their services. In some jurisdictions, insurance brokers have an obligation to give advice regarding additional coverages and limits without proving the existence of any special relationship between the broker and the client. For example, the New Jersey Supreme Court in Brill v. Guardian Life Ins. Co. of Am. (1995) held that, in addition to the duty to act with reasonable skill and diligence, the broker has a duty to inform the potential insured regarding coverage available through a temporary binder.
In Williams, the clients sued their insurance broker for failing to procure worker's compensation insurance for their business. The clients had chosen an insurance agency that advertised an expertise in providing complete insurance packages for businesses. The appellate court upheld a finding of both a duty and breach of that duty by the insurance broker. The court found the clients' evidence that they never received any advisement from the broker, that they were required to obtain separate workers' compensation insurance, and that workers' compensation insurance was not part of the "package" more credible than the broker's contrary testimony.
If you are considering filing a lawsuit against your insurance agent, it is recommended that you retain a lawyer well-versed in insurance law and holding insurance agents liable. They will be able to conduct a thorough review of your case and determine your chances of success and the value of your lawsuit.
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Misleading information
Insurance agents are trained professionals who are relied upon for advice and to purchase the insurance that their clients request. However, insurance agents sometimes provide misleading information or misrepresent the details of a policy to induce a purchase. Misrepresentation can also occur after a claim has been filed, with claims adjusters misrepresenting the terms of the policy to trick the policyholder into accepting a lowball settlement.
If you believe that your insurance agent has provided misleading information, you should consult a lawyer. If your claim has been denied or underpaid due to the agent's negligence or misrepresentation, you may be able to recover damages against the agent. This includes consequential damages, such as additional living expenses incurred while your claim is being addressed.
To successfully sue your insurance agent for negligence, you must typically prove the following elements:
- Duty: The insurance agent must have a duty to act or refrain from acting in a certain way. For example, insurance agents have a duty to inform their clients if the insurer faces financial problems.
- Breach: The insurance agent failed in their duty toward you.
- Causation: The breach of duty caused you harm that the agent should have foreseen.
In some cases, a special relationship between the insured and the insurance agent may impose a duty to advise on the agent. Factors that may indicate a "special relationship" include the agent's marketing efforts, their level of engagement with the insured, and whether they are being paid to provide additional advisory services.
It is important to note that insurance agents do not have a general duty to advise their clients on their insurance coverage needs. However, if an agent holds themselves out as an expert or specialist in a given area, they owe the client a higher duty of care.
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Bad faith denial
If your insurance claim has been denied, it is important to understand that not all denials are valid. Sometimes, insurance companies act in bad faith. Bad faith refers to a purposeful violation of the contract between you and the insurer. This could manifest as an unnecessary delay in settling your claim, an unfounded claim denial, or an unreasonably low settlement offer.
If you suspect your insurance company is acting in bad faith, the first step is to understand your policy thoroughly. Familiarise yourself with the terms of your coverage to strengthen your position during future negotiations. Additionally, document every interaction with your insurance company, including phone calls, emails, letters, and any other correspondence. Keep records of all payments, receipts, and other relevant documents. These records will serve as evidence supporting your claim.
Next, you should consider seeking legal assistance from a qualified attorney specialising in bad faith insurance claims. They will be able to review the terms of your policy and advise you on whether suing the insurance company is a viable option. Proving bad faith is not always easy, and an experienced lawyer will be able to guide you in gathering evidence and creating a compelling case. They will also handle settlement negotiations and represent you in court if necessary.
Before filing a lawsuit, follow the claim denial appeal process outlined in your insurance policy. This may involve filing an appeal with the insurance company, requesting an independent assessment, or hiring a lawyer to represent you. If the appeal process is unsuccessful, you can proceed with filing a bad faith lawsuit against the insurance company, claiming punitive damages.
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Breach of contract
A breach of contract occurs when an insurance company fails to honour its obligations as stipulated under the contract. In the context of insurance, this can happen in several ways, including:
- Denial of a valid claim: If your insurance company denies a claim that should be covered under your policy without a valid reason, it may constitute a breach of contract.
- Delayed payment: Insurance companies are required to process and pay valid claims within a reasonable time frame. Unreasonable delays can be a breach of their contractual obligations.
- Underpayment of claims: If the insurance company pays less than what you are entitled to under the policy, it may be considered a breach of contract.
- Failure to defend: If your liability insurance policy includes a duty to defend you in lawsuits and the insurer fails to provide a defence, this can also be considered a breach.
- Improper or insufficient benefits: If your insurance company issues improper or insufficient benefits, it may be in breach of contract. For example, if they are supposed to pay 80% of a surgery cost but only pay 50%, this could be a breach.
- Failure to properly investigate a claim: If your insurance company fails to investigate a claim properly, this can be considered a breach of contract.
Before suing your insurance agent or company for breach of contract, it is advisable to consult with an experienced insurance attorney. They can provide legal advice and help you understand your options. You may also want to file a formal complaint with your insurance company, as this can sometimes resolve the issue without the need for legal action.
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Frequently asked questions
Yes, in Florida, you have the right to sue an insurance agent for negligence. Negligence occurs when an insurance agent breaches their duty of care to you and causes you losses. For example, if your insurance agent failed to obtain the coverage you requested, you may be able to sue them for negligence and recover damages for the losses.
If your insurance claim was denied, you may be able to sue your insurance company for bad faith denial. This occurs when an insurance company engages in dishonest practices or fraud when dealing with claimants. For example, if they deny your claim without a valid reason or fail to honour the coverage that applies to your circumstances.
If your insurance agent provided false information when you purchased your policy, you may be able to sue them for misrepresentation. Misrepresentation occurs when an agent makes false statements or omissions about the policy's coverage.
In most cases, insurance agents do not have a duty to advise their clients on their insurance coverage needs. However, under certain circumstances, such as if a "special relationship" exists, they may have a duty to advise. If your insurance agent failed to advise you properly and you suffered losses as a result, you may be able to sue them for negligence.
