What do you get when you have a difficult new client and an independent insurance agency account manager who did sloppy work? A lawsuit that has gone through two levels of courts.
An Ohio man who had worked in his family’s auto service business for decades decided to start his own towing and repair company. He outfitted a barn on his home property with hoists and tools.
In order to obtain a registration number from the state Transportation Department, he had to first obtain insurance. He contacted the agency that had handled the family auto business insurance on the suggestion of the agent who wrote his home insurance. He spoke on the phone with an account manager between late May and mid-June 2022. Both sides agreed that they spoke on the phone two or three times during this period. The manager did not make notes on the conversation in the agency management system, nor did she make notes about her subsequent attempts to reach him by phone.
He had not given her a date when he needed the coverage to take effect during their conversations. He claimed that he told her he needed something right away during their last conversation, but he was unsure as to when that was because he was “not good with dates.” According to him, she told him she had “it handled.”
The barn was uninsured at the time because the home on the property had suffered a fire loss not long before. According to the client, no insurer would “touch” the barn until the problems with the house were addressed.
The account manager solicited quotes from two wholesale brokers. This being a new venture, standard markets were uninterested. The brokers could obtain coverage from surplus lines insurance carriers. One broker responded relatively quickly, offering a quote contingent on receipt of additional information. She did not present that quote because she anticipated that the other broker would offer better coverage.
She later testified that she attempted to call the insured two or three times but was unable to leave a message because he had not set up voicemail on his cell phone. He also did not have an email service. By mid-July, she had nothing in writing from him, no signed applications, no deposit premium, and she was having trouble reaching him by phone. Before heading out for a week’s vacation, she emailed colleagues who were backing her up that this matter was pending.
On July 24, the still uninsured barn burned down. The insured’s losses exceeded $450,000. He called the agency and spoke with one of the manager’s colleagues because she was on vacation. The colleague allegedly told him the manager had “dropped the ball” on his insurance. He sued the account manager and the agency a few weeks later.
In February 2024, the trial court granted the agency’s motion for “summary judgment,” a ruling in its favor based on the law when the facts are undisputed. The insured appealed, and in November 2024 the appellate court overruled the trial court and returned the case for jury proceedings.
The judges found that, contrary to the prior ruling, many of the facts were in dispute. The insured believed she had “handled” his insurance because that was the word she used. The judges ruled that her meaning was unclear. They also said it was unclear as to whether he was justified in relying on that statement. However, they noted that he was told she had “dropped the ball” on his request.
The agency’s errors and omissions liability insurance carrier is likely weighing whether to permit a jury to judge this case or to simply settle it. The account manager did a poor job of documenting her file, leaving too much information reliant on memories. Her colleague did her and the agency no favors with the “dropped the ball” comment. On the other hand, this insured sounded like a potential bad client. A businessman who uses neither email nor voicemail is going to cause problems. He was also very imprecise on what he needed and when.
This agency might have been better off sending him a letter by postal mail closing the matter after he did not return phone calls. That would have documented the ending before the fire. Documentation and rejecting bad clients are two excellent ways to avoid lawsuits.
