Agent for Insurer Only an Order Taker
Barry Zalma
Aug 29, 2023
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Steven and Nancy Taylor appealed the trial court’s granting defendant Lake Michigan Insurance Company’s motion for summary disposition and dismissing their case and the court’s denial of their motion for reconsideration. In Steven G S Taylor and Nancy Taylor v. Lake Michigan Insurance Company, No. 360974, Court of Appeals of Michigan (August 24, 2023) the plaintiffs alleged the agent should have required higher policy limits for the replacement of their log home.
FACTUAL BACKGROUND
Plaintiffs purchased property with a log home in Bellaire, Michigan during September 2015 for $408,000. They contacted defendant, an independent insurance agency with whom they previously did business, to assist them in securing homeowner’s insurance. Plaintiffs told defendant’s representative, Lisa Stanard, that they believed the property likely would hold a greater value in the future because they purchased it through a “distressed sale.” Stanard obtained information from Steven regarding the nature of the house and input and processed that information to generate a rate comparison and replacement cost estimate which she then uploaded into Auto-Owners Insurance Company’s (Auto-Owners) computer system.
Auto-Owners’ had the property inspected and concluded that house replacement cost estimate to $709,734. Auto-Owners issued plaintiffs a homeowner’s insurance policy which they accepted without objection. The policy contained an increased cost endorsement (ICE) that provided for payment to plaintiffs of an additional 25% ($175,250) if certain conditions were met.
Plaintiffs’ house burned and they suffered a total loss. Plaintiffs submitted a claim to Auto-Owners and a proof of loss which stated that plaintiffs estimated among other things the building damage amount at $1,282,500 and acknowledged the policy limit of $876,250 the ICE amount. Auto-Owners advised the plaintiffs that they paid the full policy limit including the ICE addition to the limits of $876,250.
Unsatisfied with Auto-Owners’ settlement of their claim, plaintiffs sued defendant essentially alleging that defendant owed them a duty to ensure the adequacy of their homeowner’s insurance policy to enable them to rebuild their house.
ANALYSIS
An insurance policy constitutes a contractual agreement between the insurer and the insured. Michigan law has long presumed that one who has signed a written contract knows the nature of the instrument and understands its contents. The rule of reasonable expectations clearly has no application to unambiguous contracts. An alleged “reasonable expectation” cannot supersede the clear language of a contract
Under common law an insurance agent whose principal is the insurance company owes no duty to advise a potential insured about any coverage.
The general rule of no duty only changes when (1) the agent misrepresents the nature or extent of the coverage offered or provided, (2) an ambiguous request is made that requires a clarification, (3) an inquiry is made that may require advice and the agent, though he need not, gives advice that is inaccurate, or (4) the agent assumes an additional duty by either express agreement with or promise to the insured.
Defendant is an independent insurance agency that serves as an agent of several insurance carriers and assists its clients in procuring insurance from those carriers. As such, defendant owed plaintiffs a duty to strictly follow their instructions. The record reflects that Auto-Owners sent a third-party inspector to plaintiffs’ Bellaire property to inspect and present Auto-Owners with the inspection report from which Auto-Owners adjusted upward the estimated house replacement cost.
No evidence establishes that anyone affiliated with defendant agreed or promised plaintiffs to assess the adequacy of the policy limits set by and offered by Auto-Owners. The record reveals that Steven knew the terms of the policy before accepting Auto-Owners’ offer.
The trial court properly determined that no genuine issue of material fact precluded granting summary disposition for defendant. The trial court correctly determined that defendant did not owe plaintiffs a duty to assess and ensure the adequacy of the homeowner’s insurance coverage that plaintiffs obtained from Auto-Owners and plaintiffs failed to establish a special relationship that gave rise to a duty to do so.
ZALMA OPINION
An insurance agent transacts insurance on behalf of the insurer. As such the insurer’s agent is an order taker who presents the order to its principal, the insurer. The agent owes no obligation to a potential insured to determine the appropriate replacement value of the dwelling. It, based on information from its principal, set a policy limit suggested by the insurer which the insured accepted and obtained the full policy limit when the house burned. Regardless, they wanted more and sued.
(c) 2023 Barry Zalma & ClaimSchool, Inc.
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Insurance Expert May Not Testify to Speculative and Contains Unsupported Conclusions.
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Law
The proponent of expert testimony must establish by a preponderance of the evidence that an expert is qualified and that the opinions are helpful, sufficiently grounded, and reliably derived and applied. Experience-based opinions must explain how the...
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Post 4846
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FACTS
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Thomas Addaquay controlled United Consolidated Accounting and Business Services (UC), nominally a check-cashing business.
The government proved a three-stage tax-refund scheme that converted the resulting refund checks into usable funds through ...
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Post 5489
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Fraudster Refuses to Answer Questions About His Alleged Fraud
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Luis Manuel Garcia Salcedo, resulted in a $6 million settlement. Non-party Jose Hernandez allegedly worked as an assistant manager at Subin, operated Hernandez Associates, and owned litigation-funding companies that shared office space with Subin and provided services to its clients.
After Great American ...
Inadequately Briefed Issues Defeats Appeal
Post 4852
Issues on Appeal Must be Adequately Briefed
Posted on September 25, 2026 by Barry Zalma
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According to his complaint, the wheelchair ramp began to rise before he had fully exited, causing his wheelchair to fall backward and allegedly injuring several parts of his body and damaging the wheelchair. The defendant denied negligence and alleged comparative negligence. After a two-day jury trial in November 2023, the jury returned a defense verdict.
The trial court denied Ojekwe’s motion to set aside the verdict and for a new trial, and he appealed.
LAW
A trial court’s refusal to set aside a verdict because of counsel’s improper remarks is reviewed for abuse of ...
Inadequately Briefed Issues Defeats Appeal
Post 4852
Issues on Appeal Must be Adequately Briefed
Posted on September 25, 2026 by Barry Zalma
In Emy Ojekwe v. Connecticut Transit District Consortium, No. AC 47389, Court of Appeals of Connecticut (September 22, 2026) Emy Ojekwe alleged that he was injured on September 24, 2020, while leaving a bus operated by Connecticut Transit District Consortium, doing business as Greater Bridgeport Transit Authority.
According to his complaint, the wheelchair ramp began to rise before he had fully exited, causing his wheelchair to fall backward and allegedly injuring several parts of his body and damaging the wheelchair.
LAW
Refusal to set aside a verdict because of counsel’s improper remarks is reviewed for abuse of discretion.
Appellate claims receiving only cursory treatment, without record citations, supporting authority, or legal analysis, are inadequately briefed.
DISCUSSION
Improper opening remarks.
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Post 4851
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