Williams v. Hilb, Rogal & Hobbs Ins. Services of California, Inc.
(Cal. App. September 9, 2009)
Following a bench trial, an insurance agency was found liable for negligence in advising on, procuring and maintaining an insurance package for a new business venture that did not include worker’s compensation insurance. The court held that although an insurance agent does not have a duty to volunteer to an insured that the latter should procure specific insurance coverage, the rule changes under certain circumstances. An agent who assumes additional duties, by holding itself out as having expertise in the insurance being sought by the insured may be liable to the insured for losses which resulted as a breach of that special duty.
Here, the court found: (1) the agent held herself out as having expertise in the insurance needs of the new business venture; (2) these needs necessarily included coverage for bodily injury to employees; (3) the application the agent provided contained a section on worker’s compensation; (4) the agent knew that worker’s compensation insurance is mandatory in California; (5) the agent’s staff calculated worker’s compensation premiums; and (6) the agent spoke to the insured about worker’s compensation insurance before she sent her insurance proposal. Under these circumstances, the agent’s failure to advise of the necessity for worker’s compensation insurance and her failure to include it in the proposed insurance package breached the duty the agent assumed by holding herself out as an expert on the products necessary to satisfy the new business venture’s insurance needs.
For a copy of the decision, click here
By Toni L. Frain and Richard J. Cohen
https://www.goldbergsegalla.com/attorneys/Frain.html
https://www.goldbergsegalla.com/attorneys/Cohen.html
Special thanks to Lexis for allowing us to publish this decision.