The Standard of Care Owed by Insurance Agents in the District Of Columbia

Everyone who has been to law school learns about Negligence and the reasonable person standard. This standard is “what a reasonable person would have done in the same or similar circumstances.” However, an insurance agent will be held to a similarly situated insurance agent in the same circumstances.

As noted by the court in Saylab v. Don Juan Restaurant,¹ an insurance agent is a professional who possesses specialized knowledge and skill and thus will be held to a higher standard.  In Saylab, the court framed the issue as what a “reasonable insurance agency in the District of Columbia would have done under the circumstances here, would a prudent agent or broker have informed [plaintiffs] about the availability of [specific] coverages.”²

Furthermore, “where an agent also holds himself out as a consultant and a counselor, he does have a duty to advise the insured as to his insurance needs, particularly where such needs have been brought to the agent’s attention.”³

I am confident the vast majority of insurance agents do a great job in procuring coverage for their clients. However, given the heightened duty of care, I would advise that insurance agents spend time with their clients. Get to know the insurance needs of each and advise them of available coverages that the clients may not know even exist.

In Saylab, the issue spawned from a failure to advise a restaurant of liquor liability coverage. This is a coverage that an insurance agent should know exists and should know that a client in the restaurant industry needs. So, it is increasingly important to spend time with the client, learn more about them and their needs, and tailor insurance coverages to meet those needs. After all, people seeking insurance are looking for protection for their most prized possessions and it is the job of the insurance agent to ensure they are covered.
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¹ Saylab v. Don Juan Rest., Inc., 332 F. Supp. 2d 134 (D.D.C. 2004).
² Id.
³ Stevenson v. Severs, 158 F.3d 1332 (D.C. Cir. 1998). Quoting 16A J.A. Appleman & J. Appleman, Insurance Law and Practice 35-66 (1981).