Every square is a rectangle, but not every rectangle is a square. That was the theme of the article Professional Negligence vs. Breach of Fiduciary Duty in Insurance Broker Malpractice Actions, NJLJ Jan. 11, 2019), wherein it was explained that not every claim for professional negligence against an insurance broker is a claim for breach of fiduciary duty. While both claims are rectangles, they don’t always square.

Since the article, two major events occurred that changed the contours of insurance producer liability in New Jersey. First, on Feb. 25, 2019, the state legislature unanimously passed Senate Bill No. 2475 (the “Bill”), which prohibited claims for breach of fiduciary duty against insurance producers acting in their professional capacity, unless a claim was made for wrongful retention or misappropriation of funds. However, the governor’s office objected to the elimination of the fiduciary standard and, as a result, it was conditionally vetoed. Second, in August 2019, the Appellate Division decided Shaw v. Shand, A-5686-17T1 (App. Div. Aug. 15, 2019). In Shaw, a home inspector case, the court sua sponte abrogated Plemmons v. Blue Chip Ins. Serv., 387 N.J. Super. 551 (App. Div. 2006), thereby exposing insurance producers to claims under the Consumer Fraud Act, N.J.S.A. 56:8-1, et al. (CFA). Thus, the standards governing the liability of insurance producers in New Jersey are at odds.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]