Insurance Broker Fails to Sell Adequate Coverage to Business

Insurance Expert WitnessThis case involves a large garden center that suffered extensive damage due to an electrical fire. After the fire, it was discovered that the business lacked the proper insurance coverage related to the damage to its property and interruption of business that the fire caused. The garden center, which operated several locations in its region, allegedly had proper insurance for all of its locations except for the one involved in the fire. It was alleged that the company’s insurance broker was at fault for not selling them the proper coverage.

Question(s) For Expert Witness

  • 1. Please describe your experience as an underwriter, specifically for commercial property insurance.
  • 2. Should the insured's broker have been aware of their previous policies and current needs, and if so, pick a policy that covered them adequately?

Expert Witness Response E-132855

Expert-ID: E-132855

I worked as an insurance company commercial lines Underwriting Manager and Territory Manager for eight years with direct responsibility for production of new business and renewal of existing business. My accounts included property, as well as other lines of business. I also audited policies that were written by my team. I also taught Certified Insurance Counselor (CIC) classes for the National Alliance For Insurance Education & Research for fourteen years that included a four-hour segment on Commercial Property. I can determine if the insured broker should have been aware of the previous policies/current needs. This situation may involve a Value Reporting Form (ISO Form CP 13 10), which I am very familiar with.

Expert Witness Response E-075335

I’ve underwritten commercial property with two major providers of commercial property and business insurance. As a State Farm agent, I did field underwriting of commercial property. I have not worked in underwriting with a Broker marketing system. The Broker is not an agent of the Insurer, so the only duty of the insurer would be normal care in reviewing the submission. I know of no examples where an underwriter or the insurer would owe a duty to reach outside of the application and supporting documents in examining a submission.


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