One of Johnny Carson’s greatest bits was when he donned a cape and turban and became the Great Carnac. The Great Carnac had the ability to divine answers to unknown questions. If the Great Carnac was real, he probably would have made a nice living as an insurance agent. Presumably, your insurance agent does not have the same mentalist powers as the Great Carnac. Because of these limitations, it is incumbent on you to actually ask the questions that the Great Carnac would otherwise divine.
People may be surprised by the extent of an insurance agent or broker’s liability. They certainly have the duty to obtain what you have instructed them to obtain. If you ask and pay for a property insurance policy, if they fail to procure that policy and you suffer a casualty, liability will be relatively easy to establish. Beyond that, the liability could be limited. What about the situation where the correct policy was purchased, but you later discover that there is a glaring exclusion that effectively guts your coverage? Is that the agent’s fault? The answer is probably “maybe.” In order to be liable for a bad policy (i.e. the right “type” of policy, but with “bad” coverage), it may be necessary to establish that the insurance agent holds himself or herself out as an expert in the specific area. For instance, an agent who “specializes” in condominium association insurance coverage may have liability for bad association coverage where a “regular” agent may not.
Getting back to the Great Carnac, courts will also not require that an insurance agent read your mind. To better protect yourself, it may be incumbent on you to come prepared when meeting with an agent. The best advice is to have specific questions for your insurance agent or broker. Having those questions in writing will help if you have to bring a claim down the road. Examples might include: My house is covered for fire, but what about my unconnected outbuilding? If a tenant’s guest causes a fire, am I still covered? If I loan my car to a neighbor, am I covered in the event of an accident? Obviously, there are thousands of questions that could be asked. For efficiency sake, a prospective insured should think through the most likely scenarios that could result in liability. Those questions should be posed to the broker. In addition to having specific questions, those seeking insurance should also look for insurance agents and brokers who profess to have expertise in the specific area of insurance.
Finding a good insurance agent and coming to the meeting prepared will hopefully result in insurance that completely protects your interests. If you blindly rely on an insurance agent to get you “the right insurance,” you better hope you’ve hired the Great Carnac. Otherwise, you might be the one with the empty envelope in the event of an uncovered loss.
