Insurance Agents & Brokers Liability

Hinshaw attorneys represent insurance agents and brokers in a wide variety of litigated and regulatory matters and have extensive experience in all aspects of the underwriting and claims processes. These include policyholder disputes and matters alleging breach of fiduciary duty, fraud, negligence, and other alleged errors and omissions, in relation to life, health, residential, commercial, and professional liability policies. We defend brokers in first-party suits against a variety of allegations, such as failure to advise properly as to policy limits, and against third-party liability suits. We also represent brokers and their newly hired agents when former employers sue to enforce non-compete agreements.

Our attorneys counsel and represent major insurance brokerage firms, privately held insurance brokerage firms, as well as independent insurance agencies. Hinshaw's knowledge of the operations of carriers offering all lines of insurance—as well as the regulatory environment in which carriers and their agents and brokers operate—gives our attorneys and clients a distinct advantage in evaluating, negotiating and defending claims against insurance professionals. We also assist agents and brokers in regulatory and self-regulatory enforcement and disciplinary proceedings.

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Legal Updates

Duties of Broker

• Obtained a published decision in 2004 that established the rule in California that an insurance broker does not have the implied duties of an insurer (e.g., to be concerned about excess exposure).

Fraud/Misrepresentation

• Represented a broker in a claim alleging it had failed to procure enough property insurance coverage and to procure business interruption coverage, causing plaintiffs to incur $2M in uninsured losses when their business was destroyed by a fire. Hinshaw successfully obtained dismissal of failure to procure claims, which was affirmed on appeal. On remand, we obtained summary judgment on the negligent misrepresentation and Consumer Fraud Act claims.
• Represented insurance agent against claims of fraud, misrepresentation and negligence. The three construction companies alleged that the insurance agent made promises and misrepresentations causing them to obtain workers' compensation insurance from Contractors a self-insured group. Eventually, the self-insured program went out of business, making each plaintiff liable for large six-figure contributions to the program. Hinshaw deposed the three principals and filed a motion for summary judgment, arguing that the agent had no obligation to monitor the financial stability of the self-insured program. Although the parties resolved the matter, the court later issued its tentative ruling granting the motion for summary judgment.
• Currently defending a lawyer who was acting as a title agent. The insured is suing for negligent misrepresentation and violation of the unfair and deceptive insurance practices statute, for statements client made regarding the terms and coverage available under the title insurance policy.

Negligence

• Currently handling numerous cases involving negligence claims against insurance brokers for failure to procure any or adequate coverage and/or for failure to timely report claims to an insurer who denied the claim due to late notice.
• Represented an insurance broker against claims that he sold insurance with inadequate limits to cover substantial fire loss. Involved issues of co-insurance penalty. After filing a motion for summary judgment based on the statute of limitations and lack of breach or causation, settled the claim for a small percentage of demand, whereas insurance company involved paid substantially more.
• Obtained summary judgment dismissing claims for failure to procure adequate insurance.
• Defended claims of failure to timely notify insurer of claim, which ultimately settled at mediation.
• Represented an insurance agent who issued hundreds of used car dealer bonds, but failed to include the signed indemnity obligation. The insurer claimed high six figures in damages caused by having to pay out on the bonds, and no recourse against the bond holder. Reached very favorable settlement after deposing the claims handler for a number of days.
• Defended claims that insurance agency was liable to its client for failing to provide timely notice of loss to the insurer. Insurer issued two separate policies of insurance that covered the loss, but only disclaimed coverage under one policy. As a result, the insurer was required to afford coverage to the insurance agency's client for the loss, thereby relieving the agency from any claim for damages suffered by its client.
• Currently representing a large broker in an action arising from alleged negligent workers' compensation audits.
• Defending an insurance agent/broker whose former broker maintains that he improperly advised the plaintiffs about an annuity, and what, if any, of the principle would be used.
• Obtained favorable settlements in multiple claims involving insufficient coverage asserted against agents who sold Commercial Lines policies to common carriers (movers of household goods).

Business Torts

• Obtained summary judgment in representation of broker in relation to various alleged business torts, including interference with contract and misappropriation of trade secrets, among others.

Admiralty/Maritime

• Currently representing large insurance brokerage firm in a negligence case in federal court in New York involving placement of coverage for a ship that was taken over by a foreign government. Case involves several millions of dollars in damages.

Class Actions

• Represented agents and brokers who were sued in separate state court and federal class actions for the allegedly fraudulent sale of health care policies. The unique issue presented was whether they knew of the alleged fraud or were duped themselves. All the claims made against our insureds were settled, including the federal class action that involved hundreds of individual and small business plaintiffs with millions of dollars sought in damages. Thereafter, we worked with a team in coordinating the response to the liquidation action by the California Department of Insurance.

Construction

• Currently representing a midwest insurance brokerage firm in defense of claims arising out of several construction surety bonds issued by agent of an insurer who allegedly did not have authority to issue the bonds.

Data Privacy/Cyber/Technology

• Currently representing broker involving cyber/technology insurance issues.

Employment/Non-Compete

• Defended a privately held insurance brokerage firm in which a competing broker was trying to stop the firm's expansion plans. There was an appeal in this case in which a Hinshaw attorney challenged the enforceability of the agreement under a number of theories, including selective enforcement against only some similarly situated agents. Hinshaw then defended a second action against some of the same defendants and obtained dismissal on estoppel issues. When plaintiff broker appealed the dismissal of the second suit, the appellate court affirmed the dismissal of the second action, reversed, and found the case to be frivolous and remanded for an award of attorneys' fees.
• Obtained dismissal of lawsuit to stop client broker's expansion efforts on the grounds the non-compete was unenforceable as too broad. The ruling was affirmed on appeal.