Legal Update for Insurance Agents & Brokers – Case Law Update
Even if appropriate insurance coverage is unavailable to obtain in the market, an insurance broker’s duty extends to informing prospective insured that the specifically requested insurance is not available and cannot be procured.
E&R Environmental Services, LLC v. Sihle Financial Services, Inc., f/k/a GHG Insurance, Inc. and Sihle Insurance Group, Inc., Fla. 5th DCA, Case No. 5D23-182, March 8, 2024
In March 2024, the Fifth District Court of Appeal examined a case wherein E&R, a disaster management business, filed suit against Silhe, its long-time insurance broker, for negligence and breach of fiduciary duty in obtaining insurance for E&R that did not meet the indemnification requirements under E&R’s contract with Danos (E&R’s general contractor). The trial court granted Sihle’s motion for summary judgment, and on appeal the Fifth District Court reversed that decision.
E&R executed an agreement with Danos to help remediate and clean up an oil spill that occurred along the Louisiana coast. The agreement required E&R to indemnify Danos for legal claims that might arise during the project. E&R purchased an insurance policy through Sihle which it believed met the needs of Danos’ contract, including indemnification.
A personal injury accident occurred at the Louisiana job site, resulting in Danos filing a third-party complaint against E&R, which was ultimately settled. E&R sought restitution for the Louisiana settlement because it contended that Sihle botched its review of Danos’ contract and assisted E&R with procuring an insurance policy which left them exposed. The Fifth District Court ruled that, even if the appropriate insurance coverage was unavailable to obtain in the market, an insurance broker’s duty extends to informing the prospective insured that the specifically requested insurance is not available and cannot be procured. This comports with longstanding Florida law, which states that an insurance agent or broker who agrees or undertakes to procure certain insurance coverage owes his principal a duty to do so within a reasonable time. Accordingly, the appellate court reversed the summary judgment in favor of Silhe to allow for a trial on E&R’s claims of negligence and breach of fiduciary duty.
**** This opinion has not yet been published in the permanent law reports and is, thus, subject to revision or withdrawal.
Legal Update for Insurance Agents & Brokers, August 2024, is prepared by Marshall Dennehey to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. We would be pleased to provide such legal assistance as you require on these and other subjects when called upon. ATTORNEY ADVERTISING pursuant to New York RPC 7.1 Copyright © 2024 Marshall Dennehey, all rights reserved. No part of this publication may be reprinted without the express written permission of our firm. For reprints or inquiries, or if you wish to be removed from this mailing list, contact tamontemuro@mdwcg.com.