With New York and New Jersey so close in proximity, it’s hard to imagine that State Law differs so much between the two, but the Courts take very different approaches to how cases against brokers and agents are handled. The main differences arise from New Jersey courts concluding the claims arise in tort, and New York concluding the claims arise in breach of contract or negligence. Furthermore, New Jersey has determined that brokers and agents are “Professionals,” and New York has not. In today’s blog, I’ll discuss broker negligence cases in New Jersey.
For those unfamiliar with torts, a tort is a wrongful act or infringement of a right which leads to legal liability. When a case is brought in tort, at its basest level, the plaintiff must show there was a duty of care owed to the Plaintiff, a breach of that duty, and the breach was the cause of Plaintiff’s damages.
The leading broker negligence case in New Jersey describes the duty an insurance procurer has to its clients;1 a procurer of insurance must
- Have the degree of skill and knowledge requisite to its employment responsibilities;
- exercise good faith and reasonable skill, care and diligence in the execution of his or her employment responsibilities;
- possess reasonable knowledge of available policies and terms of coverage in the area in which the insured seeks protection; and
- either procure the coverage necessary for the client’s exposures or advise the client of his or her inability to do so.
In New Jersey, once the breach of duty has been established, the plaintiff must produce evidence that the breach was the proximate cause of the damages to plaintiff. Proximate cause in New Jersey broker negligence claims was addressed by the New Jersey Appellate Division in Cromartie v. Carteret Sav. & Loan,2 where a homeowner sued its mortgage company for allegedly allowing the insurance policy to lapse by not paying the premiums from the escrow account. The court found for the homeowners, but explained they had the burden so show that but for the mortgage company’s breach, the policy would have covered the loss.
Damages in New Jersey for broker negligence were established in Robinson v. Janey.3 The court held “the damages which may be recovered for breach of an agreement to furnish an insurance policy is the loss sustained by the by reason of the breach; the amount that would have been due under the policy provided it had been obtained.”4
1 Rider v. Lynch, 42 N.J. 465 (1964).
2 Cromartie v. Carteret Sav. & Loan, 277 N.J. Super. 88 (App.Div.1994).
3 Robinson v. Janey, 105 N.J. Super. 585 (App.Div. 1969).
4 Id. at 591.