Plaintiff Had No Right to Rely on a Certificate of Insurance
Read the full article at https://www.linkedin.com/pulse/harm-foul-lack-damages-defeats-suit-against-broker-zalma-esq-cfe and https://zalma.com/blog plus more than 4100 posts.
A suit against an insurance broker for failing to acquire insurance was defeated with a motion for summary judgment because the plaintiff incurred no damage as a result of the alleged failure and because the plaintiffs failed to allege the elements of fraud. The order, appealed from denied those branches of its motion which were for summary judgment on the issue of liability on the third-party causes of action to recover damages for breach of contract, negligence, and fraud, and granted those branches of the third-party defendants’ cross motion which were for summary judgment dismissing those third-party causes of action.
In Devair Da Silva v. Champ Construction Corp., A. Logan Insurance Brokerage, et al., 186 A.D.3d 452, 128 N.Y.S.3d 582, 2017-10174, Index No. 506852/13, Supreme Court, Appellate Division, Second Department, New York (August 5, 2020) the appellate court resolved the dispute.
FACTS
The plaintiff sued to recover damages for personal injuries he allegedly sustained in a construction-site. The amended complaint alleged violations of Labor Law §§ 200, 240, and 241(6). At the time of the accident, the plaintiff was employed by the defendant Champ Construction Corp. (hereinafter Champ Construction).
Champ Construction sued an insurance broker, A. Logan Insurance Brokerage (hereinafter Logan), and Scott Handwerger, its principal (hereinafter together the third-party defendants). Champ Construction alleged that Handwerger, on behalf of Logan, had agreed to procure workers’ compensation coverage for the construction project, yet failed to do so.
The Supreme Court (trial court) denied those branches of Champ Construction’s motion which were for summary judgment on the third-party causes of action to recover damages for breach of contract to procure insurance, negligent failure to procure insurance, and fraud relating to the failure to procure insurance, and granted those branches of the third-party defendants’ cross motion which were for summary judgment dismissing those third-party causes of action. Champ Construction appeals.
ANALYSIS
An insurance broker may be held liable under theories of breach of contract or negligence for failing to procure insurance upon a showing by the insured that the agent or broker failed to discharge the duties imposed by the agreement to obtain insurance, either by proof that it breached the agreement or because it failed to exercise due care in the transaction.
Champ Construction failed to allege or present evidence that showed the existence of an agreement by the third-party defendants to procure workers’ compensation insurance for this project, nor that the third-party defendants specifically undertook a duty to procure such an insurance policy.
The third-party defendants established that notwithstanding the lack of workers’ compensation insurance, the plaintiff received benefits from the general workers’ compensation fund relating to this occurrence. Champ Construction produced no evidence to the contrary. The Supreme Court determined in a related declaratory judgment action, the indemnification contract was not validly executed.
The record showed, as a matter of law, that any failure to procure insurance did not proximately cause damages to Champ Construction.
A cause of action alleging fraud requires the plaintiff to plead:
a material misrepresentation of a fact,
knowledge of its falsity,
an intent to induce reliance,
justifiable reliance, and
damages.
Champ Construction failed to show, prima facie, that the third-party defendants made a material misrepresentation of fact as to the procurement of insurance. Moreover, the certificate of insurance that was purportedly issued by the third-party defendants provided that it was “issued as a matter of information only and confer[red] no rights upon the certificate holder.” Accordingly, as the Supreme Court found, it was unreasonable to rely on that certificate for coverage in the face of th[at] disclaimer language.
Therefore, the third-party defendants were entitled to summary judgment dismissing the third-party fraud cause of action.
ZALMA OPINION
To pursue a claim against an insurance agent for failing to acquire insurance ordered it is necessary to allege and prove that an order was made, that the insurance was not obtained and that the plaintiff was damaged as a result of the failure. Since the evidence established that the plaintiff was not damaged no action could survive. Since the certificate, on which the plaintiff alleged it relied, was issued only as a matter of information only and “conferred no rights on the certificate holder” there was no reason to rely on the certificate.
© 2022 – Barry Zalma
Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders.
He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business.
Subscribe to “Zalma on Insurance” at https://zalmaoninsurance.locals.com/subscribe and “Excellence in Claims Handling” at https://barryzalma.substack.com/welcome.
You can contact Mr. Zalma at https://www.zalma.com, https://www.claimschool.com, [email protected] and [email protected] . Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.
You may find interesting the podcast “Zalma On Insurance” at https://anchor.fm/barry-zalma; you can follow Mr. Zalma on Twitter at; you should see Barry Zalma’s videos on https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg/featured; or videos on https://rumble.com/zalma. Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims–library/ The last two issues of ZIFL are available at https://zalma.com/zalmas-insurance-fraud-letter-2/
The Largest Residential Burglary of All Time
Post 5407
Fraud & the Fear of Bad Faith Suits
Posted on July 22, 2026 by Barry Zalma
See the full video at https://lnkd.in/gWQQEySW and at https://lnkd.in/gyhdK6wv
This is a Fictionalized True Crime Story of Insurance Fraud explaining why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is one of a collection designed to help to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the Perpetrators than any Other Crime.
This is a Fictionalized True Crime Story of Insurance Fraud explaining why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is one of a collection designed to help to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the Perpetrators than any Other Crime.
After ...
Chutzpah is not Enough
Post 5397
Posted on July 20, 2026 by Barry Zalma
See the video and at https://lnkd.in/gNUs2XzT and at https://lnkd.in/g2MawyzX
Magistrate Issues a Search Warrant if there is a Fair Probability that Contraband or Evidence of a Crime will be Found in a Particular Place.
In United States Of America v. Frank Suess, et al., CRIMINAL No. 3:24-308, United States District Court, M.D. Pennsylvania (July 16, 2026) a federal grand jury indicted Frank Suess, Melissa Driscoll, and others in a 55-count health care fraud and anti-kickback prosecution arising from an alleged scheme involving medically unnecessary prescription “foot baths.”
As part of the investigation, the FBI obtained an August 19, 2022 warrant to search Driscoll’s Sterling Pharmacy Yahoo email account for emails from January 1, 2018 through December 31, 2020. Driscoll moved to suppress the resulting evidence, arguing that the warrant lacked probable cause, was overbroad, and rested on material misstatements and omissions.
LAW:
The ...
Fraud Shouldn’t Pay
Post 5396
See the video and at https://rumble.com/v7ctgmq-the-great-jewel-theft.html at https://youtu.be/aRbQ2sJfGwA
This is a Fictionalized True Crime Story of Insurance Fraud explaining why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is one of a collection designed to help to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the ¬¬¬Perpetrators than any Other Crime.
The Insured purchased, for the first time in his life, a policy of Personal Articles Floater Insurance (PAF) scheduling $125,000 worth of ladies jewelry. He advised the insurer that the jewelry was always kept in a class E safe at his residence. He also told the insurer that he was employed full time as the owner of a gasoline service station and that he had never been canceled or suffered a previous loss.
One month after the policy was ...
Day Care Owner Loses Subsidies Because She Criticized State
Post 5421
Posted on August 11, 2026 by Barry Zalma
First Amendment Right Will be Allowed to Go to Trial
In Betsey J. Grant v. Maine State Department Of Heath And Human Services, No. 1:25-cv-00490-JAW, United States District Court, D. Maine (August 6, 2026), Betsey J. Grant, a licensed childcare provider and operator of Tiny Tikes Daycare in Trenton, Maine, sued Maine DHHS and several employees after she publicly criticized DHHS before Maine’s Government Oversight Committee and alleged that officials retaliated against her.
She claimed DHHS imposed and extended a conditional license, published stigmatizing information, interfered with subsidies and program funding, removed her from a food program, rescinded an expansion grant, and used biased or falsified evidence in licensing proceedings. Following the March 10, 2023, GOC testimony, Ms. Grant alleges that foster children's subsidies (approximately $30,000) were withheld; she was removed from the ...
Rescission for Material Misrepresentation
Post 5418
Posted on August 5, 2026 by Barry Zalma
An Insurer May Rescind An Insurance Policy Where The Applicant Made A Material Misrepresentation In The Application.
In Union Mutual Fire Insurance Company v. 844 Knickerbocker, LLC, et al. No. 2024-10359, Index No. 602824/22, 2026 NY Slip Op 04789, Supreme Court of New York, Second Department (July 29, 2026) Union Mutual Fire Insurance Company issued commercial insurance policies to 844 Knickerbocker, LLC, and Sanjaya Mallick based on applications stating that the insured property contained two apartment units. After an underlying personal injury action was filed, Union Mutual determined that the property actually contained three apartment units and rescinded the policies on the ground that the defendants had made a material misrepresentation in the applications.
LAW:
A misrepresentation is material if the insurer would not have issued the same policy, or would have issued it only on different terms, had the true ...
Rescission for Material Misrepresentation
Post 5418
Posted on August 5, 2026 by Barry Zalma
An Insurer May Rescind An Insurance Policy Where The Applicant Made A Material Misrepresentation In The Application.
In Union Mutual Fire Insurance Company v. 844 Knickerbocker, LLC, et al. No. 2024-10359, Index No. 602824/22, 2026 NY Slip Op 04789, Supreme Court of New York, Second Department (July 29, 2026) Union Mutual Fire Insurance Company issued commercial insurance policies to 844 Knickerbocker, LLC, and Sanjaya Mallick based on applications stating that the insured property contained two apartment units.
LAW:
A misrepresentation is material if the insurer would not have issued the same policy, or would have issued it only on different terms, had the true facts been disclosed. To establish materiality as a matter of law, the insurer must submit documentation of its underwriting practices, such as manuals, guidelines, bulletins, or rules addressing similar risks.
DISCUSSION/ANALYSIS:
As a result, the...
