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not establish causation because Foster’s alleged misrepresentations pertained to a different insurance policy that was no longer in effect at the time of the Camp Fire.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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Post 5196
Posted on September 25, 2025 by Barry Zalma
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Post 5195
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FACTS
Plaintiff's Application:
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Accident:
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Post 5185
Posted on September 8, 2025 by Barry Zalma
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Post 5185
Posted on September 8, 2025 by Barry Zalma
See the full video at https://lnkd.in/gePN7rjm and at https://lnkd.in/gzPwr-9q
This is a Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers.
The Dishonest Chiropractor/Physician
How a Need for Profit Led Health Care Providers to Crime
See the full video at and at
This is a Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is 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.
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The Need for a Claims Handling Expert to Defend or Prove a Tort of Bad Faith Suit
© 2025 Barry Zalma, Esq., CFE
When I finished my three year enlistment in the US Army as a Special Agent of US Army Intelligence in 1967, I sought employment where I could use the investigative skills I learned in the Army. After some searching I was hired as a claims trainee by the Fireman’s Fund American Insurance Company. For five years, while attending law school at night while working full time as an insurance adjuster I became familiar with every aspect of the commercial insurance industry.
On January 2, 1972 I was admitted to the California Bar. I practiced law, specializing in insurance claims, insurance coverage and defense of claims against people insured and defense of insurance companies sued for breach of contract and breach of the implied covenant of good faith and fair dealing. After 45 years as an active lawyer, I asked that my license to practice law be declared inactive ...
