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Trust is required for the agent's alleged false representations of coverage



The North Carolina Court of Appeal was asked whether an allegation of unfair and misleading business practices against an insurance agent, based on the agent's misrepresentation to a third party of the terms of an insurance policy, can be retained. ] DC Custom Freight, LLC v Tammy A. Ross & Associates, Inc., No. COA 19-1059, Court of Appeals Of North Carolina (September 1, 2020)

ACTUAL HISTORY

Plaintiff DC Custom Freight, LLC, brought an action against its insurance agent, defendant Tammy A. Ross & Associates, Inc., after the defendant sent documents to a third party indicating that the plaintiff's coverage was broader than what was in the policy. The plaintiff was left without cover when a truck it rented from a third party was involved in an accident. The appellant appealed.

The plaintiff is a freight and trucking company operating in North and South Carolina. The defendant is an insurance agent and broker. In 201

6, the plaintiff accused the defendant of obtaining commercial car insurance and providing the defendant with a list of the plaintiff's equipment and a copy of its previous insurance for use as a "passerby". Through the defendant, the plaintiff purchased insurance from Wesco Insurance Company ('Wesco'). Trucks rented in the short term were not listed individually and were not covered by the insurance.

On 6 December 2017, Rush's insurance company requested that the defendant send an insurance certificate ("COI") showing the plaintiff's liability insurance limits. Deductibles and physical damage deductibles for rented or leased vehicles. The defendant prepared and sent a COI to the insurer and to the plaintiff. This certificate ("COI from December") only stated that the insurance cover covered the liability. The certificate did not mention collision coverage. Defendant sent a second COI ("revised COI for December") to the insurer, revised to add the item "Specified Perils / Collision Deductibles: $ 2500." The revised COI for December was not sent to the plaintiff.

The following year, the plaintiff renewed the insurance it had purchased through the defendant. Defendant sent a third COI to Rush's insurer ("March COI"), which was identical to the revised COI for December except that it listed a deductible of $ 3,000 for "Specified Risks / Collision." The COI from March, like the revised COI version in December, was sent only to Rush's insurer and not to the plaintiff.

In June 2018, the plaintiff rented a truck from Rush in the short term. The short-term lease agreement with Rush required the plaintiffs to provide collision insurance for the truck. In July, the rented truck was damaged in a collision. The plaintiff filed a claim with Wesco. The claim was rejected because the short-term lease was not covered by the plaintiff's policy.

The plaintiff sued the defendant. Following a hearing, the trial court rejected the plaintiff's request for a summary judgment on its UDTP claim and granted the defendant's request for a summary judgment on all of the plaintiff's claims. The appellant appealed.

ANALYSIS

The appeal contests only the granting of a summary judgment by the Court of Justice and the denial of its amendments concerning its allegations of negligence, breach of contract and unfair and misleading business practices.

Negligence

The plaintiff alleges in his negligence allegation that the defendant, because it failed to obtain insurance coverage for short-term rental cars, violated its obligation to "use reasonable skill, care and diligence" to obtain insurance for the plaintiff.

An insurance agent's obligation when procuring insurance is limited to securing the coverage requested by the policyholder. Failure to recommend additional insurances to cover a risk faced by the policyholder does not constitute negligence. The defendant had no obligation to obtain coverage beyond what the plaintiff actually requested.

The previous insurance cover provided by the plaintiff to the defendant as an example of the coverage needed did not include coverage for short-term rentals. The plaintiff did not present any evidence that it requested greater or different coverage from what is prescribed in the previous insurance. Plaintiff's insurance agent and broker. In order to establish a claim for breach of contract, the party claiming at the outset has to show that there is a valid contract and a breach of the terms of that contract.

An insurance certificate is not an insurance policy and does not change, extend or change the coverage provided by the insurance to which the insurance certificate refers. An insurance certificate does not provide a certificate about the insurance holder new or additional rights in addition to what the referenced insurance policy explicitly prescribes.

A COI, sent to a third party and never communicated to the insured, without any additional consideration, does not create additional contractual obligations to the insured.

Unfair and misleading commercial practices

The plaintiff finally claims that the Court of First Instance erred in its assessment of unfair and misleading commercial practices. The plaintiff must show confidence and, since the plaintiff has failed to do so, the court properly issued a summary judgment on this claim.

In order to try a UDTP claim under sections 75-1.1, a plaintiff must show that (1) the defendant committed an unfair or misleading act or practice (2) in or affected the trade that (3) most likely caused harm to the plaintiff. Determining whether an act is an unfair or misleading act that violates sections 75-1.1 is a matter of law. Misrepresentation of the terms of an insurance policy is a in itself misleading act that fulfills the first element of a UDTP claim.

The plaintiff's assertion is also based on a misrepresentation by the defendant as to what was covered by its policy: the policy did not provide comprehensive or collision coverage for short-term rentals, but the revised COI and December COI mean that this coverage exists. Incorrect reproduction of the terms of an insurance is by law a misleading act. However, the plaintiff cannot show remorse for the misleading act because the revised COIs for December and March were never seen by the defendant before the accident gave rise to this case. To prove causation, trust is required.

Supreme Court decision in North Carolina Bumpers v . Community Bank of Northern Virginia 367 NC 81, 88, 747 SE2d 220, 226 (2013) argued that the plaintiff's allegation was based on a false statement, and that they could not prove the immediate cause without providing sufficient evidence to they actually relied on the erroneous submission.The actual reliability requires that the plaintiff confirmed has incorporated the alleged erroneous submission into their decision-making process.

The need to read the entire policy

The evidence, which is considered in the light most favorable to the plaintiff Since the plaintiff's representatives could have reviewed the insurance policy at any time and found that collision coverage was not provided for short-term rent, any reliance on such weakened information was unreasonable. have discovered the truth of the matter through r ill care, but failed to investigate.

In cases of negligent misrepresentation when conditions are expressly expressed in politics, dependence on misrepresentations about these terms is unjustified.

Since the evidence, considered in the light most favorable to the plaintiff, was insufficient to show that (1) the defendant made an erroneous petition to the plaintiff for insurance coverage; (2) The plaintiff relied on the representation; or (3) If the plaintiff's weakened reliance on a third party trust would be reasonable, the court did not err in allowing the defendant's request for a summary judgment.

Any person acquiring insurance is required to advise the agent or broker on the coverage required. In this case, the insured did not ask the agent to obtain collision insurance for short-term rentals. Only after a short-term rental was damaged in a collision did they search for the insured neither ordered nor – with a quick review of the insurance – received. In this case, we also learn that a COI is nothing more than advice on the existence of a particular insurance policy at a particular point in time and cannot change the existing insurance policy or provide more coverage than the insurer agreed to provide. Since the lack of coverage for collision with short-term leases was obvious by reading the policy failed, the allegation of fraud was insured.


© 2020 – Barry Zalma. He also acts as an arbitrator or mediator for insurance-related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims lawyer and more than 52 years in the insurance industry. He can be found at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine / ACE Legend Award.

For the past 52 years, Barry Zalma has devoted his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to enable insurers and their claims staff to become professionals in insurance claims.

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