In my previous post regarding insurance broker negligence in North Carolina, I reached the conclusion that North Carolina can be considered an “order taker” state, whereby the insurance agent simply purchases what the client asks for and is under no duty to advise further. The courts have stated this “duty does not, however, obligate the insurer or its agent to procure a policy for the insured which had not been requested.”1 This is the standard in North Carolina, however, as with most all standards, there are exceptions.
North Carolina courts have found that insurance brokers have an implied duty to give further advise to their clients where: (1) the agent received consideration beyond mere payment of the premium; (2) the insured made a clear request for advice; or (3) there is a course of dealings over an extended period of time which would put an objectively reasonable insurance agent on notice that his advice [was] being sought and relied on.”2
Whether an implied duty exists will be a factual determination and the burden will be on the plaintiff to prove that implied duty. In Bigger, it was determined that a 28 year relationship between the parties was not sufficient – absent more substantial allegations – to create an implied duty to advise. Accordingly, it will be difficult in North Carolina to hold an agent responsible for failing to advise what policies are available and/or necessary for a client to purchase.
Based upon these holdings, I would advise all insurance customers to ask many questions of your insurance broker about the types of policies available and what sorts of policies they would recommend for you. Ask these questions in writing and save the letters or emails. This will make you a more informed consumer and, should something happen and you find yourself uninsured or underinsured, it may create the implied duty you need to establish liability.