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You can lead an insured to coverage, but you can't



The old saying that you can lead a horse to water, but you can't get him to drink, applies to insurance agents and brokers who give good advice to their customers who – for economic reasons – refuse to follow advice and then suffer from loss as a result. Flood insurance, although necessary, is often expensive. When a housing association's insurance agent advised them, they were cautiously underinsured and if there was a loss, it would suffer a serious insurance penalty, just because the association ignored the council when the sentence was judged to join the lawsuit agent because his warning became true. Bijou Villa Condominium Association, Inc. vs. EA King, Inc. and Ed King Docket No. A-4234-1

7T3, Superior Court of New Jersey Appellate Division (May 1, 2019), after having retained damage to its property caused by flooding during Superstorm Sandy (Sandy) complainant Bijou Villa Condominium Association, Inc. filed a complaint against the accused, claiming that they failed to obtain sufficient flood insurance.

FACTS

The applicant manages and maintains the two-storey seventy-year villa complex adjacent to the Shark River in Neptune, New Jersey.

Ed is licensed in New Jersey to sell life, health, property and non-life insurance. In 1986, the plaintiff's board asked Ed (resident of the association) to help with their insurance needs. He remained the prosecutor's insurance broker for property and liability insurance until 2008 and handled the flood insurance until 2013.

In January 2004, Ed sent the property manager a letter stating that the plaintiff's flood insurance would renew the following month. The letter said that the amount of coverage at that time was $ 250,000 per building and warned "this is not enough coverage if a serious flood would seriously damage the buildings. [Plaintiff] would face serious co-insurance penalties. will be costly. "Kathy gave Ed's letter to the board, explaining to them which co-insurance penalties were and offered to take Ed to a board meeting to further explain his letter. The board did not ask Kathy any questions about the letter or request Ed's attendance at a meeting. However, the Board increased the flood insurance to $ 332,800 per building for the policy 2004-2005.

Ed informed the board that according to the property policy, the buildings are insured for just over $ 6,000,000 while the flood policy only has $ 250,000 on each of the buildings. He explained that the plaintiff would insure at least [eighty percent] the replacement cost that would be $ 4.8 million or $ 2.4 million on each building. To ensure the correct value, he explained that the entire flood contribution would be about $ 10,000 – an increase of $ 5,900 over the current grant.

Due to the warning agreed to increase the flood limit, however, the board agreed only to gradually increase coverage due to financial hurdles, as opposed to raising the proposed $ 2.4 million for each building. For the policy period 2010-2011, the Board increased its flood protection to $ 1.21 million per building, again through the insurer's review extension forms. This was the coverage when Sandy occurred in October 2012.

After the storm, the insurance company decided that both buildings were underinsured, as they were valued around $ 3.8 million and $ 3.6 million, but only insured $ 1.2 million each. The insurer determined the plaintiff should have insured each building for $ 3 million. As a result, the plaintiff was subjected to a large insurance penalty, which reduced his payment amount by $ 450,000.

Consequently, the applicant alleged that the defendants failed to obtain full insurance cover for their property, which led to the claimant incurring an employee's insurance penalty and reducing the payment of his claim for damages caused by Sandy.

After hearing an oral opinion, judge Jamie S. Perri handed out a thorough and comprehensive oral opinion, granting the movement of the defendants and denying the plaintiff's.

ANALYSIS [19659004] Kathy, although Ed's wife, was not an employee or officer of the agency. Ed did not appoint her as an agent for the agency. The applicant did not show any evidence to contradict Ed's statement that Kathy had no responsibility other than to investigate the agency with the agency.

All of Kathy's interaction with the board was in the capacity of the plaintiff's property manager. There was uncontrolled evidence that Kathy conveyed the board's flood protection notice to Ed. In turn, she presented the board with Ed's letter and premium income for the coverage. Kathy was not an insurance broker and did not get insurance for the plaintiff.

The record shows Ed informed Kathy in a letter in August 2006 that each building was insured for $ 250,000 in flood insurance and if the board wanted maximum coverage, it needed to increase its flood policy to $ 2.4 million per building. Ed's letter was sent to the board. In January 2007, the accused Kathy presented a $ 1 million quote for each building. The Board never increased its flood insurance to Ed's recommended amount.

The material fact is that Kathy requested a quote for $ 1 million in coverage. In response to the quoted quotation, Kathy urged the defendants to acquire flood protection of $ 1 million per building. Her note recommended increase in coverage was according to the board's instructions.

New Jersey has recognized some limited circumstances that can create a particular relationship between an agent and an insured. Specifically, when an insurance broker undertakes assignments that offer the insured's detrimental confidence and trust beyond those normally associated with the insured relationship, additional duties may be imposed.

In this case, the applicant has not shown that any additional relationship existed between the parties other than a traditional agency-insured dynamic. In the case of flood insurance, the plaintiff disregarded Ed's warnings that it was underinsured and subject to co-insurance penalties. The applicant also failed to observe Ed's recommendations on how much coverage it would receive. The argument that the plaintiff trusted Ed's council is not supported by the post.

Prove that no good deed becomes unpunished Ed, and his wife as real estate manager, found that the assurance of ensuring or valuing an insurance penalty was not followed by the board which limited the coverage they purchased due to lack of sufficient with money to pay the premium for the necessary coverage. They talked that they would not have a big loss. Super Storm Sandy meant that they would lose the gig and rather than accept the board's fault they brought the agent to not force them to buy the insurance they needed. The effort, rightly so, failed.


© 2019 – Barry Zalma

This article and all the blog posts on this site, melt and summarize issues published by the courts of the various states and the United States. The court decisions have been modified from the actual language of the court decisions, condensed to facilitate reading and convey the author's views in each individual case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance management, bad faith assurance, and insurance fraud nearly equal for insurers and policyholders. He also serves as an arbitrator or mediator for insurance-related disputes. He practiced law in California for more than 44 years as an insurance cover and law firm and more than 50 years in the insurance industry. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual liability magazine / ACE Legend Award.

Over the past 51 years Barry Zalma has put his life on 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 to become insurance managers.

"Arson-for-profit Fire at Cowboy Bar & Grill"

A true crime novel based on the perception of the author, Barry Zalma, who for over 51 years has acted for insurers facing the fire department, one of the most dangerous insurance fraud. The book explains how an insurance accountant, working with a fire protection and origin expert, a forensic accountant and insurance consultant, could defeat a system of urgent gain and get a judgment that requires the offender not to take anything and pay back [19659000] Available as a Kindle -Book.


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