What could constitute a “special relationship” and what impact does that have? To start with, let’s look at the typical responsibilities of the insurance producer and the client in obtaining an insurance policy. It is important to understand that each state potentially has some uniqueness to the standards to which agents will be held.
In most states, an insurance agent is not required to:
– provide an insurance policy that would cover all possible contingencies
– advise an insured with respect to coverage options
– advise the insured as to every exclusion contained in the policy
Ordinarily, an insurance agent assumed only those duties normally found in an agency relationship, including the obligation to deal with his or her principle in good faith and to carry out instructions and assumed no duty to advise merely by such a relationship. Absent an agreement to the contrary, an agent has no duty beyond what he or she has specifically undertaken to perform on behalf of the client. Insurance professionals owe a duty to their customer to exercise reasonable skill, care and diligence in effecting insurance.
It is important for agents to realize that there are some potential scenarios that could raise this standard to the next level including:
►An agreement or contract in place between an insurance professional and his or her customer / client. This agreement can be written or verbal and thus as agents interact with their prospects / customers, it is important that they carefully communicate their intentions. For example, if the producer stated, “I will make sure you are covered for whatever could happen”, this statement could have a significant negative impact in the defense of the agency. While this statement certainly does not automatically elevate the agent’s duties to the level of “special relationship”, it certainly would not help
the agency’s defense.
►Intimate knowledge of a client’s personal and business endeavors. If the agency has for some time, written the customer’s entire insurance program (potentially both personal and commercial lines), this could elevate the duty to which they will be held.
►Possession of special skills or knowledge. This would typically imply a duty to their customer to act with the care, competence and diligence normally exercised by agents with such skills or knowledge. In the promotion of the agent / the agency, avoid using the word “expert” as this has the potential to raise the bar.
If these “special circumstances” are present in the relationship between the agency and the customer, the insurance agent could be under a duty to take some sort of affirmative action, rather than just follow the instructions of the client. The plaintiff’s attorney will need to prove this and show that the customer relied heavily on this in securing their insurance program.