In the world of Agents E&O, there is the potential for courts to impose different levels of legal liability standards in a litigation matter. In the overwhelming majority of E&O cases, the agent “has no duty to advise as a matter of law because the parties’ relationship was a typical agent-insured relationship”.
In some respects, you can view the agent as an “order taker”. As unappealing as that may sound, when an agent gets thrust into an E&O litigation matter, they may just be glad that this is the standard that they are held to.
There are a number of scenarios where there is the potential for the courts to impose a special relationship standard on the agent and thus hold them to a higher standard, essentially that of an advisor. While it often felt that the longer the relationship, the more there is the possibility of a “special relationship” standard, this is really not true. In essence, while all special relationships are long term, not all long term relationships are special. There is much more that the courts look at to determine this special relationship standard. Those issues involve whether the agent:
– Exercises broad discretion to service the insured’s needs
– Counsels the insured regarding specialized insurance coverages
– Holds oneself out as highly skilled expert, coupled with the insured’s reliance upon the expertise
– Receives compensation, above the customary premium paid, for the expert advice given
An agent’s duty to procure coverage has been viewed as distinct from their duty to advise. While the concept of special relationship has been around for some time, most courts seem to be reluctant to find a duty to advise as a matter of law.