Last week, I wrote about how advertisements can help prove the necessary relationship in an agent negligence case. While establishing the relationship is very important, successful agent negligence cases must go one step further and establish that the agent failed to perform one of the duties required. Collins v. State Farm Ins. Co., 2007 WL 1296240 (E.D. La. Apr. 30, 2007) highlights this issue.
Edward Collins owned property in Louisiana and had homeowners insurance for the property from 1991 until May 30, 2005, when the policy lapsed without his knowledge. His property was damaged during Hurricane Katrina in August 2005 and his claim was denied based on the expiration of the policy. Mr. Collins filed suit against his insurance agent for, amongst other things, negligent misrepresentation claiming that he met with his agent only a week before Hurricane Katrina and was informed that he was fully covered. The agent, in his motion for summary judgment, argued that while he did meet with Mr. Collins, there was no discussion of his homeowners policy and therefore he made no misrepresentation. The court noted:
Under Louisiana law, an insurance agent has a duty to use reasonable diligence in placing the insurance requested and to promptly notify the client if he fails to obtain the requested insurance. However, an insurance agent’s duties can be greater than merely procuring the insurance requested, depending on what service the agent holds himself out as performing and the nature of the specific relationship between the agent and his client.
The court pointed out that:
A plaintiff may recover for negligent misrepresentation if (1) the defendant owes a duty to supply correct information; (2) the defendant breaches that duty; and (3) the plaintiff suffers damages resulting from a justifiable reliance on that misrepresentation. An insurance agent has a duty to provide his client with correct information, thus he may be liable for negligent misrepresentation if he provides incorrect information to the client on which the client relies and is thereby damaged.
Because the agent and Mr. Collins gave conflicting accounts of the meeting one week before Hurricane Katrina, there was an issue as to a material fact and the agent’s motion for summary judgment was denied. Establishing the duty was not enough in this case; Mr. Collins still had to prove to a jury that the agent failed to provide him with correct information.
Keep in mind that this case applied Louisiana law and the law in other states may vary.