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Legal Updates for Insurance Agents & Brokers - August 2018

August 21, 2018
Presented by the Insurance Agents & Brokers Liability Practice Group

Edited by Timothy G. Ventura, Esq.

Just Because An Expert Says It, Doesn’t Make It So  

By Lawrence Berg, Esquire

New Jersey courts have generally recognized that in the ordinary negligence/malpractice case against an insurance producer, the standard of practice for the insurance producer must be established by expert testimony since a jury generally lacks the requisite special knowledge, technical training and background to be able to determine the applicable standard of care. Mindful of this requirement, plaintiffs will frequently produce an expert report in which the purported expert opines that the conduct at issue failed to meet the standard of care because he/she would have handled the situation differently. However, such an opinion, premised solely upon the expert’s explanation of how he/she would have acted, constitutes a net opinion and will not support a cause of action. New Jersey courts have consistently held that net opinion, or purported expert opinion based upon speculation or conjecture, is inadmissible at trial. Buckelew v. Grossbard, 87 N.J. 512, 524 (1981). Net opinion can best be described as an expert’s “bare conclusion” unsupported by factual evidence. See Jimenez v. GNOC Corp., 286 N.J. Super. 533, 540 (App. Div. 1996). The rule often focuses upon the failure of the expert to explain a causal connection between the act or incident complained of and the injury or damage allegedly resulting therefrom. Therefore, the net opinion rule requires the expert witness to give an explanation and basis for the opinion, not just a mere conclusion.

The New Jersey Appellate courts have instructed that in a professional negligence case, the plaintiff must produce expert testimony upon which the jury could find that the consensus of the particular profession involved recognizes the existence of the standard defined by the expert. It is not sufficient for the plaintiff’s expert simply to follow slavishly an “accepted practice” formula. Put more simply, a standard that is personal to the expert is equivalent to a net opinion.

In Taylor v. DeLosso, 319 N.J. Super. 174 (App. Div. 1999), the plaintiff’s expert witness testified that the defendant architect deviated from accepted standards of architectural practice by failing to make a site inspection of the plaintiff’s property to verify the location of a maple tree before preparing the site plan. The appellate court held that this opinion was materially deficient since the expert presented no authority supporting his opinion and there was no reference made to any written document, or even unwritten custom or practice, indicating that the opinion represented the consensus of the architectural community. The total absence in the expert’s testimony to any text book, treatise, standard, custom or recognized practice, other than his personal view, rendered the the conclusions to be a net opinion.

This requirement was recently revisited in Satec v. The Hanover Group, et al., 450 N.J. Super. 319 (App. Div. 2017), in the context of a claim that an insurance producer failed to secure flood insurance for its client. In reaching its decision on the insurance broker’s motion to strike, the Appellate Court noted that the plaintiff’s expert had failed to offer objective support for his personal views on the applicable standard of care. The Appellate Court pointed out that the expert failed to identify the source of the standard of care by which to measure the plaintiff’s claimed deficiencies or to determine whether there was a breach of duty.

Applying this requirement to a claim handled by our office, we were able to secure the dismissal of a malpractice claim against an insurance producer when the court found that the plaintiff’s expert’s opinion—that the agent had an obligation to annually re-offer a client flood insurance after the client had indicated that they were not interested in the coverage—was based upon nothing more than the expert’s personal view of how he would have handled the situation. It was not based upon accepted standards or requirements within the professional community.

In defending a malpractice claim, it is essential to determine at an early point in the litigation whether expert testimony is required and to ensure that the opinions being offered in support of the claim represent a true standard in the industry, not just the personal view of the expert. Many times an expert will take the easy way out and simply indicate that he/she would have handled the situation differently, and by doing so, the conclusion may constitute a net opinion and open the claim to potential dismissal.

Larry is a shareholder in our Mount Laurel, NJ office who can be reached at



Proper Documentation Is The Key To Defeating Claims Of Negligent Procurement  

By Ray C. Freudiger, Esquire

You, an independent insurance agent, have a client who is starting up a brand new business and asks you to procure a comprehensive general liability policy. Your client is concerned about the cost of new business, so tells you to keep premiums at a minimum. You obtain for her business, commercial liability coverage and commercial property coverage, but it did not contain business interruption insurance.

The policy is delivered to your client, but she is too busy to read it. Several months go by, and your client’s business does much better than anticipated. Unfortunately, an accidental fire destroys the entire premises.

The carrier pays your client the amounts owed for property damage under the policy. Your client now claims, however, that she should also receive business interruption coverage. Further, she claims that she even requested business interruption coverage from you, although the policy delivered did not include it. She sues you for negligently failing to procure business interruption coverage. How do you successfully defend the lawsuit? The answer is proper documentation.

One of the strongest errors and omissions defenses involves producing written accounts of activities and conversations that occur during the insurance procurement process. Agents should habitually confirm any oral conversations with a customer in writing immediately after the communication takes place and document their file accordingly.

Agents should also consider recording all in-bound and out-bound phone calls. Further, in today’s technological age, agents should retain copies of all email correspondence, ideally in paper format, contained in the customer’s physical file.

Fortunately, you were a diligent agent who took good notes contemporaneously with your discussions, during which your client emphatically emphasized the need to keep premiums to a minimum by not adding optional coverages. Further, you recorded the conversation of her comments that she wasn’t even sure she could pay the second or third months of premiums because of the uncertainty of whether the business would be successful or not. Clearly, business interruption coverage was the last thing on her mind.

You also produce in discovery your written acknowledgement to her that no additional coverages have been placed on her behalf. Putting aside the additional defense that she was negligent in failing to review the policy, the implementation of your best practices has put you in the best position to prevail against her negligent procurement claim.

In today’s highly litigious environment, proper documentation enables insurance agents to put themselves in the best position to steer clear of E&O claims. They can set themselves up with strong defenses in the event they ever find themselves on the receiving end of an E&O action.

Ray Freudiger is a shareholder in our Cincinnati, Ohio office and can be reached at



The material in this law alert has been prepared for our readers by Marshall Dennehey Warner Coleman & Goggin. It is solely intended to provide information on recent legal developments, and is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. We welcome the opportunity to provide such legal assistance as you require on this and other subjects. To be removed from our list of subscribers who receive this complimentary Legal Update for Insurance Agents & Brokers,
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Affiliated Attorney

Lawrence B. Berg
(856) 414-6031
Ray C. Freudiger
(513) 372-6803
Timothy G. Ventura
(215) 575-2582
Christopher E. Dougherty
Director, Professional Liability Department
(215) 575-2733
Eric A. Fitzgerald CPCU, CLU
Assistant Director, Professional Liability Department
(215) 575-2688

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