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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Concealing a Weapon Used in a Murder is an Intentional & Criminal Act
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In Howard I. Rosenberg; Kimberly L. Rosenberg v. Chubb Indemnity Insurance Company Howard I. Rosenberg; Kimberly L. Rosenberg; Kimberly L. Rosenberg; Howard I. Rosenberg v. Hudson Insurance Company, No. 22-3275, United States Court of Appeals, Third Circuit (February 11, 2025) the Third Circuit resolved whether the insurers owed a defense for murder and acts performed to hide the fact of a murder and the murder weapon.
FACTUAL BACKGROUND
Adam Rosenberg and Christian Moore-Rouse befriended one another while they were students at the Community College of Allegheny County. On December 21, 2019, however, while at his parents’ house, Adam shot twenty-two-year-old Christian in the back of the head with a nine-millimeter Ruger SR9C handgun. Adam then dragged...
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Washington state law allows insurers to deliver insurance notices and documents electronically if the party has affirmatively consented to that method of delivery and has not withdrawn the consent. The Plaintiffs argued that the terms and conditions statement was not “conspicuous” because it was hidden behind a hyperlink included in a single line of small text. The court found that the statement was sufficiently conspicuous as it was bolded and set off from the surrounding text in bright blue text.
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In Samuel Tourkow, by David Tourkow v. Michael Thomas Fox, and Sweet Insurance Agency, formerly known as Verbiest Insurance Agency, Inc., Third-Party Defendant-Appellee. Encompass Indemnity Company, et al, Nos. 367494, 367512, Court of Appeals of Michigan (February 12, 2025) resolved the claims.
The plaintiff, Encompass Indemnity Company, issued a no-fault insurance policy to Jon and Joyce Fox, with Michael Fox added as an additional insured. The dispute centers on whether fraud occurred in...
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FACTS
In September 2020, Givens matched with J.C. on the dating app “Tagged.” J.C., who was 20 years old at the time, had known Givens since childhood because their mothers were best friends. After matching, J.C. and Givens saw each other daily, and J.C. began working as a prostitute under Givens’s direction.
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Von Harris was convicted of bribery, forgery, and insurance fraud. He appealed his conviction and sentence. His appeal was denied, and the Court of Appeals upheld the conviction.
In State Of Ohio v. Von Harris, 2025-Ohio-279, No. 113618, Court of Appeals of Ohio, Eighth District (January 30, 2025) the Court of Appeals affirmed the conviction.
FACTUAL BACKGROUND
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