Presented byJoseph D. Hampton

May 21, 2013

Overview of Liability of Producers

Common allegations:• “I thought I had coverage but it appears that I don’t”  • “I have coverage but it’s not

enough”

Where coverage is the issue:• Insurer is sued• Producer is sued“If there is no coverage then Producer messed up.” 

Where the amount of coverage is the issue:• Producer is the focus of the suit• Insurer often named as vicariously liable entity

Side trip: procedural context of lawsuits• 1st resolution method: summary judgment• 2nd resolution method: trial• 3rd resolution method: settlement

Why is this important?• Facts and disputes over them are

determinative of outcomes• Simple rule statements subject to

exceptions (“yeah, but...”)

General rule:Absent a “special

relationship,” a producer owes no to duty to obtain a sufficient amount of coverage, or particular types of coverage.

Corrollaries:• Insured must advise the producer of the coverages and limits he wants• Insured is in the best position to know his needs

When does a “special relationship” exist? 1. Representation by producer

of specialization, and additional compensation, OR

2. Longstanding relationship, interaction on coverage, and reliance by insured

Specialist scenario:• more common with brokers than agents• more common with specialized commercial products (i.e., marine)• often involves consultation fees

Longstanding relationship scenario:• 7-plus years (in caselaw)• repeat business, multiple products, meetings• historical reliance by insured on agent’s advice

Cost calcuators:• explain them and imperfections• explain how they are used• GIGO – use correct data

Mortgaged properties: • find out lender’s minimums• consult with insured thereafter• explain lender’s requirement for ACV, not necessarily RCV

Contents coverage: • explain limitation to percent of structure value• explain availability of riders for particular properties (i.e. jewelry)

Protect yourself!• explain coverage nature and limits• follow through on commitments (“I will run the estimation program,” “I will see if underwriting will up the RCV”)• DOCUMENT AND CONFIRM YOUR COMMUNICATIONS

Questions?