In the insurance world, after a loss has been sustained or a claim made for which there is insufficient or no coverage, it is not unusual for insureds to argue that they would have had full coverage but for the failure of their agent or broker to properly advise them. For sound public policy reasons, the rule in the vast majority of states has generally been that agents and brokers are not fiduciaries of their clients with respect to their insurance choices. They generally have a responsibility only to purchase the coverage requested or to advise that they are unable to do so within a reasonable period of time. And that is where the duty typically ends absent “special circumstances.”
The reason for this is that insureds are in a better position than anyone else to know their insurance needs, calculate the value of their assets and business operations, measure their ability to pay for insurance and determine their ability to absorb uninsured risk. Further, if you were to act on the presumption that agents and brokers should be deemed responsible for insureds’ purchasing the coverage necessary for all possible circumstances, you would place an impossible burden on them. You would also run the risk that insureds would have no incentive to purchase the appropriate coverage, and would instead rely on their agent’s or broker’s errors and omissions coverage as excess insurance to protect them in the event that their coverage proved insufficient for a particular loss or claim.
