Mishandling a client coverage change request is one of the surest ways for an independent insurance agency to end up in a courtroom. That was the fate of a Florida agency after a client asked them to add a driver to their coverage.
The agency obtained, among other insurance policies, occupational accident policies for a trucking company. The policies covered the company’s truck drivers for up to $1 million for injuries.
In March 2019 the insured sent an email to the agency informing them that they had hired a new driver. The email asked that all coverage be deleted for one driver “from anything” and that coverage should be added for the new one. The email did not specifically mention the occupational accident policy or an insurance limit. The company then sent a second email with the new driver’s name, date of birth, and driver’s license number. An agency representative responded by asking how many years’ driving experience the new driver had. Two days later, the company sent another email stating that he had 30 years’ experience.
That was the last of the communications between the insured and the agency about this driver. However, the agency sent the insured monthly invoices for insurance coverage after the date of the last email. The insured assumed that the coverage was in place. It wasn’t.
Less than two months later, the new driver fell from the sleeper bed in his truck while on a job for the company. Though the judge’s opinion did not mention the dollar amount of damages, he described the man’s injuries as “multiple spinal fractures, among other injuries.” At the least, it can be assumed that he did not work as a truck driver again for many months and possibly ever.
The occupational accident insurance claim was denied (the judge’s opinion did not state the reasons for the denial.) The driver sued the trucking company for failure to carry appropriate insurance coverage. In July 2021 the two sides reached an out of court settlement. In accordance with Florida state law, the company assigned its rights to sue the insurance agency to the injured driver as part of the settlement.
He sued the agency the next month for negligently failing to procure the coverage the company requested. The agency asked the court to dismiss the suit.
In December 2021, the judge declined to dismiss the suit, finding that the truck driver had made a plausible claim. “It may have been incumbent on the broker,” he wrote, “to apprise (the company) whether its insurance request was limited in any way and to explain that different coverage may have been required to meet the company’s expectations.”
The agency had presented several arguments as to why it had no obligation to cover the new driver. While offering no opinion as to whether those arguments were valid, the judge ruled that they were not enough to warrant dismissing the case at that early stage of the proceedings. He permitted the case to continue to the stage where facts are presented for evaluation.
The published legal trail ends there. It seems likely that the two sides have settled in the two years since the judge made his decision.
It appears that someone at the agency lost track of the insured’s request and never sent it to the insurer. The last email exchange was about the driver’s experience, and the insured answered the question. The onus was on the agency to ask any questions such as the coverages the request applied to. They did not do that, and the insured assumed all was taken care of.
The lesson: Have consistently followed procedures in the agency for handling client change requests. If more information is needed, ask the client immediately. These measures will not prevent all errors and omissions lawsuits, but they can make them less likely.
