Broker Not Liable In Negligence If Insured Wanted Coverage But Broker Did Not Agree To Get It

The Court of Appeals of Wisconsin reversed a trial court’s denial of summary judgment, and dismissed a negligence case against an insurance broker who had not obtained coverage the policyholder wanted, but which the broker never agreed to get.  The case is Avery v. Diedrich, 2006 WL 1540787 (June 7, 2006).  

In the case, a couple inherited property that they believed was underinsured at $150,000.  They wanted the insurance raised to $250,000.  The broker said the property was not worth that much and raising it to that level would look suspicious.  The couple set about getting an assessment of the property, but never communicated it to the broker.  The property was then destroyed by fire, and the replacement value exceeded $250,000.  

The court said Wisconsin law clearly supported a negligence claim against a broker who promises to obtain coverage but doesn’t do so.  However, the court said the broker’s duty to the insureds ended when he got them the policy because of the lack of agreement to procure additional coverage.  This result sounds right in this case, but I wonder if the court’s analysis would have changed if the couple had actually communicated the higher assessment to the broker.  If the broker failed to obtain coverage when he had clear evidence the couple was justified in the request for higher limits, a negligence claim might have been stronger. 

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