Several recent appellate decisions have dealt with important issues pertaining to actions against insurance agents or brokers. We summarize below those recent decisions that set forth and apply well-settled general propositions of law regarding the duties of an insurance agent or broker to its customer/insured, and then focus specifically on an issue that appears to be somewhat unsettled, but is soon to be addressed by the Court of Appeals—the issue of the customer/insured’s duty to read the policy and its effect upon the agent’s or broker’s liability for failing to procure requested coverage.
Agent/Broker’s Duty
In Obomsawin v. Bailey, Haskell & Lalonde Agency Inc., 85 A.D.3d 1566 (4th Dept. 2011), the court noted that “‘[A]n insurance agent’s duty to its customer is generally defined by the nature of the customer’s request for coverage’ (M&E Mfg. Co. v. Frank H. Reis Inc., 258 A.D.2d 9, 11 (1999); see Madhvani v. Sheehan, 234 A.D.2d 652, 654 (1996)).” As the Second Department explained in Axis Constr. Corp. v. O’Brien Agency Inc., 87 A.D.3d 1092 (2d Dept. 2011), “An insurance agent or broker has a common-law duty to obtain requested coverage for a client within a reasonable amount of time or to inform the client of the inability to do so (see Hoffend & Sons Inc v. Rose & Kiernan Inc., 7 N.Y.2d 152, 157 (2006); Murphy v. Kuhn, 90 N.Y.2d 266, 270 (1997); Core-Mark Intl. v. Swett & Crawford Inc., 71 A.D.3d 1072 (2010); Verbert v. Garcia, 63 A.D.3d 1149 (2009).”
