A recent California decision, Koch v. Markel Insurance Co., 2011 WL 208365 (Cal. Ct. App., 2d Dist., Div. 7 Jan. 25, 2011), highlights the duties insurance agents owe to an insured in California. The case involved a new auto repair shop owner, Blake Koch, who sought to obtain certain insurance from an employee of the Bradford Agency, who was also an agent of Markel Insurance Company.

Koch alleged that during his dealings with the agent, he specifically requested that the agent procure slip-and-fall coverage for the auto repair business. The agent not only agreed to do so, but he also held himself and his agency out as an expert in garage-keepers insurance. The agent prepared an insurance package that included the garage-keepers insurance from Markel and a separate workers compensation policy from a different insurance company.

Koch later incorporated part of his business, but left the other part as it was. Koch asked the agent to ensure that the insurance policies be changed so that there would be no gap in coverage. The agent prepared a new application, and had Koch sign it without affording Koch a reasonable opportunity to review it. The new policy provisions proved to be insufficient.

An employee at the garage fell and injured himself. After receiving workers’ compensation, the employee sued Koch for negligently maintaining the garage premises. Koch sought a defense from Markel, but was denied because of the policy language. Koch then sued Markel, and also sued the agent for agent negligence because he procured insufficient coverage.

The trial court dismissed the suit, reasoning that insurance agents have no duty to procure a specific type of coverage for an insured. Koch, however, successfully appealed to the California Court of Appeal, which reasoned that insurance agents take on added responsibility when, like the agent in this case, they hold themselves out as experts in a field. The court further held that this responsibility, or duty, is even clearer when the insured specifically requests a particular type of coverage. Because Koch had a viable negligence claim against the agent, the Appellate Court also held that Koch had a potentially viable claim against Markel, which could be held vicariously liable for the actions of its agents.

Importantly, this case illustrates that even though an insurance agent doesn’t represent the insured, in some circumstances, the agent may have a greater duty to ensure that the insured gets what they bargain for. Take this lesson to heart—if your insurance company denies your claim based on a gap in coverage that you believe shouldn’t have existed, remedies may be available. Keep in mind that this case came from California’s Second District Court of Appeal, and the law in other jurisdictions may differ. An insured’s remedies will depend on the particular facts of the case and the specific law of the jurisdiction where the case may be brought.