Insurance brokers have a fiduciary duty to their clients. However, according to the Illinois Appellate Court, that fiduciary duty only applies to a specific policy and a specific period.
The case captioned Garrick v. Mesirow Financial Holdings, Inc., 2013 IL App (1st) 122228, explains this principle.
The plaintiffs brought a professional negligence action against their previous insurance brokers, Mesirow Finanical. They alleged that Mesirow had negligently failed to include a pair of diamond earrings as an insured item in an insurance policy.
Years later, the earrings were lost and the plaintiffs sued Mesirow. By that time the plaintiffs had a different insurance broker.
The court set forth its reasoning as follows:
"[D]efendants owed a duty only with respect to a specific policy, for a specific policy period. 735 ILCS 5/2-2201(a) (West 2004). They owed a duty only for a policy that they procured. It is the insured's responsibility to advise his insurance broker of his insurance needs. ... Plaintiffs' argument attempts to broaden the statutorily defined duty of an insurance broker so that it would include responsibility for a policy that the broker did not obtain. There is no allegation in plaintiffs' amended complaint that plaintiffs informed defendants or even their subsequent insurance producer of their purchase of the replacement earring...."
This holding is consistent with common sense and economics. The person who buys insurance knows best what he or she owns and should be able to report that to his insurance carrier.
Edward X. Clinton, Jr.
www.clintonlaw.net
The case captioned Garrick v. Mesirow Financial Holdings, Inc., 2013 IL App (1st) 122228, explains this principle.
The plaintiffs brought a professional negligence action against their previous insurance brokers, Mesirow Finanical. They alleged that Mesirow had negligently failed to include a pair of diamond earrings as an insured item in an insurance policy.
Years later, the earrings were lost and the plaintiffs sued Mesirow. By that time the plaintiffs had a different insurance broker.
The court set forth its reasoning as follows:
"[D]efendants owed a duty only with respect to a specific policy, for a specific policy period. 735 ILCS 5/2-2201(a) (West 2004). They owed a duty only for a policy that they procured. It is the insured's responsibility to advise his insurance broker of his insurance needs. ... Plaintiffs' argument attempts to broaden the statutorily defined duty of an insurance broker so that it would include responsibility for a policy that the broker did not obtain. There is no allegation in plaintiffs' amended complaint that plaintiffs informed defendants or even their subsequent insurance producer of their purchase of the replacement earring...."
This holding is consistent with common sense and economics. The person who buys insurance knows best what he or she owns and should be able to report that to his insurance carrier.
Edward X. Clinton, Jr.
www.clintonlaw.net
