Our legal team has focused on resolving insurance disputes for decades, so we are well-versed in the many ways insurance companies fail to meet their obligations to policyholders. But sometimes, the problems our clients face are not necessarily the fault of the insurance company. Instead, the root of the problem lies with negligence or misrepresentation on the part of the insurance agent or broker who sold the policy.
What do you do in that situation? The issues can get complex, and we can’t address every potential situation in a blog, so your most effective option is to consult a knowledgeable insurance attorney who can review the facts of your case and determine the most effective course of action to obtain relief. Here are some of the issues that could come into play when a broker or agent has made a critical mistake.
Agent vs. Broker
It is helpful to understand whether your issue concerns an insurance agent or an insurance broker. Many people use the terms interchangeably, but they are not the same. An insurance broker sells insurance policies offered by multiple companies, whereas an insurance agent typically works with a single insurance company. Agents are usually representatives of the insurance company, so they have a certain loyalty and duty to that company. The relationships between the broker or agent can impact the approach used and the ability to recover compensation for negligence.
Failure to Purchase Coverage
Fortunately, it does not happen often, but there are times when a policyholder has filed a claim with an insurance company only to discover that the coverage they thought they’d purchased was never actually obtained. This is more likely to occur in a situation where an individual or business purchases a policy, pays the premium, and then later contacts the agent or broker to add additional coverage, but the change is never implemented. For instance, a company might seek to add business interruption coverage, but when it goes to file a claim, it learns that these losses aren’t covered because the additional coverage was not added.
Whether due to an administrative mistake or deliberate fraud, policyholders can find themselves lacking critical coverage because the agent failed to enroll them. An insurance attorney can investigate to determine how the mistakes occurred and show why the broker or agent should be held liable for malpractice due to their negligent or otherwise wrongful conduct.
Misrepresentation
Insurance brokers and agents have a duty to provide accurate information about the policies they sell. They don’t always fulfill that obligation. They might intentionally mislead potential clients to close a sale, or they might provide incorrect information by mistake because they didn’t take the time to verify that they had accurate data about a particular situation.
When an agent or broker misrepresents a critical fact and an individual or company relies on that fact when purchasing coverage, and they suffer losses when the truth is revealed, then the agent or broker can be held liable.
For instance, a broker or agent might assure the policyholder that their policy covers them for wind damage when that type of damage is specifically excluded from coverage. Or they might inform them that the deductible is a fixed amount when, instead, it is calculated based on the value of the home. Statements from the agent or broker could lead the client to believe that they have coverage for the replacement cost of the property when, in fact, the coverage only extends to a depreciated “actual” value. Insurance policies have intricate terms, and policyholders rely on agents and brokers to help them understand those terms. When an agent or broker provides erroneous information and the client relies on it to their detriment, an attorney can work to hold them liable for the resulting losses.
Coverage That is Inadequate or Inappropriate
Insurance agents and brokers often fail to understand their clients’ situations and needs fully. They may advise a business or individual to purchase coverage of one type when, in fact, they needed something different to cover the losses they were concerned about. If an agent or broker sells a policy that is inappropriate for the situation, they could be held liable for negligence. On the other hand, if they misrepresent a policy and claim that it will enable the client to rebuild their home or business when in fact the policy only covers a small portion of the losses, then the agent or broker could be held liable for fraud.
Failure to Communicate Important Information
The insurance agent or broker serves as the intermediary between the insurance company and the policyholder, and this role entails specific duties regarding the communication of information. When an insurance company makes changes to a policy or updates coverage terms, the broker or agent must ensure that the policyholder receives this information. They also need to inform the policyholder when premiums are due, so that the policyholder can maintain coverage.
Insurance agents and brokers do not have an obligation to tell a client whether there are other policies or coverage options that would better meet their needs. However, they are required to provide accurate information about key issues related to policies, including coverage limits and deductibles.
Whether an Insurance Dispute Involves the Agent or the Insurance Company, Ver Ploeg & Marino Can Fight for Your Rights
When an insurance company tells you that your losses aren’t covered as you expected, it’s not always easy to determine what went wrong. At Ver Ploeg & Marino, we’ve been representing policyholders in insurance disputes for decades, so we’ve seen the tremendous variety of mistakes that can lead to serious losses for clients. We work effectively to resolve disputes and know the most effective strategies to help our clients recover resources to cover their losses.
If you believe an agent, broker, or insurance company failed to act responsibly or you just can’t get a straight answer about why coverage was denied, we invite you to call us at 305-577-3996 or contact us online to schedule a confidential consultation with us to learn more about the ways we may be able to help.
