Last month, I discussed the difference between insurance agents and insurance brokers, and how the actions of insurance agents (and under limited circumstances insurance brokers) can bind an insurance company. Here I will discuss two different causes of action that can be brought against an insurance broker or an insurance agent: breach of the duty of care and negligence.
Managerial tasks derive from an administrative relationship that can be expressed or implied. 1 Since insurance is a company that is significantly affected by the public's trust, courts have explicitly found that both insurance agents and insurance brokers have a relationship of trust with both the customer and the insurance company. 2 If a relationship of trust is established, the trustee has a legal obligation to "disclose any material or material facts that are relevant or material to the transaction in question." 3 Black & # 39; s Law Dictionary defines a duty of care as follows:
An obligation of the greatest good faith, trust, confidence and sincerity that a trustee (such as an agent or a trustee) owes to the recipient ( as the agent's principal or the recipients of the trust); an obligation of utmost good faith, trust, confidence and sincerity that a trustee (such as a lawyer or business executive) owes to the beneficiary (such as a lawyer's client or a shareholder); an obligation to act with the highest degree of honesty and loyalty to another person and in the other person's best interests (such as the duty that one partner owes another). 4
Negligence, on the other hand, can be found when an insurance agent or broker "voluntarily, without consideration or expectation of compensation or reward, agrees to procure an insurance policy" and does not do so. 5 If an insured person relies on the insurance agent's commitment (even if this commitment is free), it is sufficient to trigger the insurance agent's or broker's obligation to exercise reasonable skill and prudence to obtain adequate coverage. 6 If such negligence can be established, the insurance agent or broker may be held liable for damages resulting from that negligence. 7 In order to calculate the damages to the insured, a court would compare what an insured would have recovered if the premises were fully insured with his or her actual net recovery. 8
In Florida, breach of administrative duty and negligence are separate causes of action that can be brought against insurance agents and brokers. Both should pay attention to their obligations and obligations under the law to avoid unnecessary legal pitfalls.
2 Wachovia Ins. Services, Inc. v. Toomey 994 So. 2d 980, 990 (Fla. 2008) (distinction between claims raised in breach of administrative duty and negligence and that both are separate causes of legal action). Natelson v. Dept of Ins. 454 So. 2d 31, 32 (Fla. 1st DCA 1984); Randolph v. Mitchell 677 So. 2d 976, 978 (Fla. 5th DCA 1996).
3 Miami Children & # 39; s Hosp. 264 F. Supp. 2d at 1071 (interpretation of Florida law with omitted quotes).
4 Black & # 39; s Law Dictionary (11th Edition 2019); Klonis v. Armstrong 436 So. 2d 213, 216 (Fla. 1st DCA 1983) (notes that an insurance agent or broker may be held liable for damaging that person for breach of contract or negligence).
5 Sheridan v. Greenberg 391 So. 2d 234, 236 (Fla. 3d DCA 1980); Armstrong 436 So. 2d at 216.
6 Sheridan at 236 ( with reference to to Reed Mfg. Co. v. Wurts 187 Ill. App. 378 (1914
7 Armstrong 436 So. 2d vid 216.