Insurance Agent Has No Obligation to Investigate an Insured’s Coverage Needs
Post 4987
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Plaintiff Liza Sims’ mother owned a house in Magalia, California, that was insured under a policy issued to her by Farmers Insurance. Before the Camp Fire, Sims lived alone in her mother’s house and operated a cosmetic tattoo business there. After the house was destroyed by a wildfire called the Camp Fire in 2018. The insurance company paid Sims’ mother the limits available under her policy but denied Sims’ claim for the loss of her personal and business property. Sims sued Farmers Group, Inc. (Farmers) and insurance agent Dawn Foster (Foster or agent) (collectively, defendants) for negligent misrepresentation and professional negligence.
In Liza Sims v. Farmers Group, Inc., et al., C097755, California Court of Appeals (January 24, 2025) Plaintiff attempted to get coverage for the destruction of business property from a homeowners policy the excluded such coverage.
Trial Court Ruling
The trial court ruled in favor of the defendants, stating that Sims’ claims were legally insufficient because she could not show harm from the agent’s alleged misrepresentations and could not prove the defendants owed or breached any duty of care.
Appeal
Sims appealed, arguing that the court erred. The appellate court affirmed the trial court’s decision.
Issues & Conclusions
Sims’ claims were based on alleged representations by Foster about the insurance coverage on the property.
The trial court concluded that Sims could not establish causation because Foster’s alleged misrepresentations pertained to a different insurance policy that was no longer in effect at the time of the Camp Fire.
Sims’ evidence was insufficient to create a triable issue of material fact.
The trial court also ruled that Sims could not establish Foster owed or breached a duty of care to Sims because the duties of an insurance agent run only to the client, and Sims was not Foster’s client.
The appellate court agreed with the trial court’s findings and affirmed the judgment.
Analysis
Negligent misrepresentation is a species of the tort of deceit. To prove negligent misrepresentation, a plaintiff must show (1) a misrepresentation of a past or existing material fact, (2) made without reasonable ground for believing it to be true, (3) with intent to induce another’s reliance on the fact misrepresented, (4) justifiable reliance on the misrepresentation by the party to whom it was directed, and (5) resulting damage.
Sims alleged that she had two in-person conversations with Foster, the agent, in 2013 and 2014 where she was led to believe her business property was covered. The trial court concluded that Sims could not establish the elements of causation (justifiable reliance and resulting damage) because Foster’s alleged misrepresentations pertain to coverage under an earlier homeowners’ insurance policy, which was replaced by the landlord policy in effect at the time of the fire, more than a year before the Camp Fire that damaged the house.
Disposition:
The judgment was affirmed, and the defendants were awarded their costs on appeal.
The trial court ruled in favor of the defendants because Sims’ claims were legally insufficient because Sims could not show harm from the agent’s alleged misrepresentations and could not prove the defendants owed or breached any duty of care.
In her deposition testimony and discovery responses, Sims admitted facts that directly contradicted the statements in her declaration in opposition to the motion for summary judgment.
Ordinarily, an insurance agent assumes only those duties normally found in any agency relationship. This includes the obligation to use reasonable care, diligence, and judgment in procuring the insurance requested by an insured. However, an insurance agent generally does not have a duty to investigate a customer’s coverage needs, to procure coverage to meet those needs, or to point out the advantages of additional or different insurance coverage.
The trial court properly ruled that because the underlying claims against Foster failed as a matter of law there could be no case against Farmers.
The judgment was affirmed and the defendants were allowed to recover their costs on appeal.
ZALMA OPINION
Insurance agents who do not take on the position of a fiduciary are basically order takers and are only obligated to obtain the insurance ordered. The fact that the agent may have told the plaintiff that her business property was covered by one policy – whether true or not – was not a misrepresentation about a subsequent policy totally different from the one in effect at the time of the fire. People really must read the policy before buying it and before making a claim or filing suit. The court did and the Plaintiff lost.
(c) 2025 Barry Zalma & ClaimSchool, Inc.
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The Professional Claims Handler
Post 5218
Read the full article at https://www.linkedin.com/pulse/zalma-philosophy-claims-handling-part-8-barry-zalma-esq-cfe-zdwsc, see the full video at https://rumble.com/v70zl4s-the-zalma-philosophy-of-claims-handling-part-8.html and at https://youtu.be/MIYcF71ffRQ, and at https://zalma.com/blog plus more than 5200 posts.
Claims Commandment X – Thou Shall Not Pretend to be a Lawyer
Some experienced and professional claims people know the law in their area of expertise better than most lawyers.
Adjusters should be adjusters and leave lawyering to lawyers. Similarly, lawyers should be lawyers and never try to be adjusters.
Claims Commandment XI – Thou Shall Empathize With the Claimant
Everyone presenting a claim is unhappy, disturbed, shocked, injured and needs help.
Empathy is identification with and understanding of another’s situation, feelings, and motives. It is the ability to understand another person’s circumstances, point of view, thoughts, and feelings....
HOW TO CREATE AN EXCELLENCE IN CLAIMS HANDLING PROGRAM
See the full video at https://rumble.com/v70wb2i-the-zalma-philosophy-of-claims-handling-part-6.html and at https://youtu.be/tL5nDKPEs40 and at https://zalma.com/blog plus more than 5200 posts.
Post 5217
This is a change from my normal blog postings. It is my attempt. in more than one post, to explain the need for professional claims representatives who comply with the basic custom and practice of the insurance industry.
An Excellence in Claims Handling program begins with a statement in the insurer’s claims manual or statement of professionalism that it is dedicated to providing excellence in claims handling to every insured who presents a claim.
The excellence in claims handling program should include, at a minimum:
A series of lectures supported by text materials explaining:
A definition of insurance.
How to read and understand an insurance policy.
How to interview an insured, witness, or claimant.
How to assist an insured in the insured’s obligation to ...
The Professional Claims Handler
Post 5216
Read the full article at https://www.linkedin.com/pulse/zalma-philosophy-claims-handling-part-5-barry-zalma-esq-cfe-jde8c, see the full video at https://rumble.com/v70q4x8-the-zalma-philosophy-of-claims-handling-part-5.html and at https://youtu.be/6b9tZQsEkB4, and at https://zalma.com/blog plus more than 5200 posts.
This is a change from my normal blog postings. It is my attempt. in more than one post, to explain the need for professional claims representatives who comply with the basic custom and practice of the insurance industry.
Standards to be a Professional Claims Adjuster
The Insurance claims professional should be a person who:
1. Can read and understand the insurance policies issued by the insurer.
2. Understands the promises made by the policy.
3. Understand their obligation, as an insurer’s claims staff, to fulfill the promises made.
4. Are competent investigators.
5. Have empathy and recognize the difference between empathy and sympathy.
6. ...
The Professional Claims Handler
Post 5219
Posted on October 31, 2025 by Barry Zalma
An Insurance claims professionals should be a person who:
Can read and understand the insurance policies issued by the insurer.
Understands the promises made by the policy.
Understand their obligation, as an insurer’s claims staff, to fulfill the promises made.
Are competent investigators.
Have empathy and recognize the difference between empathy and sympathy.
Understand medicine relating to traumatic injuries and are sufficiently versed in tort law to deal with lawyers as equals.
Understand how to repair damage to real and personal property and the value of the repairs or the property.
Understand how to negotiate a fair and reasonable settlement with the insured that is fair and reasonable to both the insured and the insurer.
How to Create Claims Professionals
To avoid fraudulent claims, claims of breach of contract, bad faith, punitive damages, unresolved losses, and to make a profit, insurers ...
The History Behind the Creation of a Claims Handling Expert
The Insurance Industry Needs to Implement Excellence in Claims Handling or Fail
Post 5210
This is a change from my normal blog postings. It is my attempt. in more than one post, to explain the need for professional claims representatives who comply with the basic custom and practice of the insurance industry. This statement of my philosophy on claims handling starts with my history as a claims adjuster, insurance defense and coverage lawyer and insurance claims handling expert.
My Training to be an Insurance Claims Adjuster
When I was discharged from the US Army in 1967 I was hired as an insurance adjuster trainee by a professional and well respected insurance company. The insurer took a chance on me because I had been an Army Intelligence Investigator for my three years in the military and could use that training and experience to be a basis to become a professional insurance adjuster.
I was initially sat at a desk reading a text-book on insurance ...
The History Behind the Creation of a Claims Handling Expert
The Insurance Industry Needs to Implement Excellence in Claims Handling or Fail
Post 5210
This is a change from my normal blog postings. It is my attempt. in more than one post, to explain the need for professional claims representatives who comply with the basic custom and practice of the insurance industry. This statement of my philosophy on claims handling starts with my history as a claims adjuster, insurance defense and coverage lawyer and insurance claims handling expert.
My Training to be an Insurance Claims Adjuster
When I was discharged from the US Army in 1967 I was hired as an insurance adjuster trainee by a professional and well respected insurance company. The insurer took a chance on me because I had been an Army Intelligence Investigator for my three years in the military and could use that training and experience to be a basis to become a professional insurance adjuster.
I was initially sat at a desk reading a text-book on insurance ...
