In a narrow 4-3 decision, the New York Court of Appeals has opened up the pathway to insurance brokers’ liability to their customers for failure to procure proper [or sufficient] insurance coverage. This article will examine the case decided and its potential ramifications, especially with hundreds of unpaid Storm Sandy claims hovering in the background.
On Feb. 25, 2014, in Voss v. Netherlands Insurance and CH Insurance Brokerage Services (2014-01259 (N.Y. Feb. 25, 2014), the New York Court of Appeals reversed two lower court decisions, which had granted summary judgment to defendant broker dismissing the negligence complaint against it. The Court of Appeals ruled that a “question of fact” exists as to the broker’s liability. In this case, plaintiff, a business owner, had obtained property coverage and business interruption coverage beginning in 2004. At the inception of the relationship, according to plaintiff’s deposition testimony, the broker had asked for sales figures and other information to calculate the needed amount of business interruption coverage. The broker recommended $75,000 in coverage and told plaintiff it was adequate. According to plaintiff, the broker told her “that it would review the coverage annually.”
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