In part one of this series I reviewed broker negligence in New Jersey, in part two, I will discuss broker negligence cases in New York.

Contrary to New Jersey where the claim is based in tort, New York allows an agent or broker to be sued under theories of either breach of contract or negligence. Rather than leading to more successful claims against the brokers and agents however, the New York courts have interpreted the duties owed by the brokers in such a restrictive manner, it’s much more difficult to show that a duty has been breached (but it can be done).

New York does not consider insurance brokers or insurance agents to be “professionals.” The New York Court of Appeals identified the qualities typically associated with professionals as “extensive formal learning and training, licensure and regulation indicating a qualification indicating a qualification to practice, a code of conduct imposing standards beyond those accepted in the marketplace and a system of discipline for violation of those standards.”1

Because a broker or agent is not a professional, they owe no special duties to their clients. An insurance broker acting as the agent of its client has a duty of reasonable care to the client to obtain the requested coverage within a reasonable time after the request, or to inform the client of the agents’ inability to do so, however there is no common-law duty of an insurance company or agency to advise a client to procure additional coverage.2

New York requires proof of proximate causation to establish broker liability.3 To hold a broker liable for failure to procure insurance, the coverage must have been available prior to the loss4 and but for defendant’s negligence, the insurance would have been purchased.5

New York measures the damages in a claim against the broker as the liability that would have been attributed to the insurer had the policy been in force.6

1 Chase Scientific Research Inc. v. NIA Group, 96 N.Y.2d 20, 29, 749 N.E.2d 161 (2001).
2 Hjemdahl-Monsen v. Faulkner, 204 A.D.2d 516, 517, 611 N.Y.S.2d 209; Erwig v. Cook Agency, 173 A.D.2d 439, 570 N.Y.S.2d 64; Blonsky v. Allstate Ins. Co., 128 Misc. 2d 981, 491 N.Y.S.2d 895.
3 MacDonald v. Carpenter & Pelton, Inc., 298 N.Y.S. 2d 780, 31 A.D.2d 952, 953 (N.Y.App.Div. 1969).
4 Rodriguez v. Investors Insurance Company of America, 201 A.D.2d 355, 607 N.Y.S.2d 329 (App.Div.1994).
5 Polly Esther’s South, Inc. v. Setnor Boyd Bogdanoff, 807 N.Y.S.2d 799 (N.Y.Gen. Term 2005).
6 Structural Building Products Corp. v. Business Insurance Agency, Inc., 281 A.D.2d 617, 620 (App.Div.2001).