Advertising Disclosure Email Disclosure

Legal Updates for Insurance Agents & Brokers - July 2018

July 6, 2018
Presented by the Insurance Agents & Brokers Liability Practice Group

Edited by Timothy G. Ventura, Esq.

A Primer on Insurance Agents and Brokers Liability in Maryland  

By Christopher J. Conrad, Esquire

Courts in Maryland have long held that an independent insurance broker (or agent) is viewed as an agent of the insured, not the insurer. In American Casualty Co. v. Ricas, 179 Md. 627, 631 (1941), the Maryland Court of Appeals first considered whether an insurance broker who placed policies with several insurers, and who was not employed by any single insurer (i.e., a captive agent), was to be deemed an agent of the insurer. The court reasoned:

[A]n insurance agent, so far as the insurer is concerned, is a person expressly or impliedly authorized to represent it in dealing with third parties in matters relating to insurance, and an insurance solicitor, or broker, is one who acts as a middle man between the assured and the insurer, and who solicits insurance from the public under no employment from any special company, but having secured an order, either places the insurance with a company selected by the assured, or in the absence of any selection by him, then with a company selected by the broker. Ordinarily, the relation between the insured and the broker is that between principal and agent. An insurance broker is ordinarily employed by a person seeking insurance, and when so employed, is to be distinguished from ordinary insurance agent, who is employed by insurance companies to solicit and write insurance by, and in the company.

Thus, in light of this principal/agent relationship, an independent agent or broker generally owes a duty “to exercise reasonable care and skill in performing his duties. And if such a representative fails to do so, he may become liable to those…who are caused a loss by his failure to use standard care. Typically, the…duty of an agent or broker stems from a relationship of ‘confidence and trust’ that an insured has placed in an ‘experienced and knowledgeable’ insurance agent or broker.” Sadler v. Loomis Co., 139 Md. App. 374, 395-96 (Md. Ct. Spec. App. 2001) (citations omitted). See also Insurance Co. of N. Am. v. Miller, 362 Md. 361, 386 (2000) (“Like conventional agents, an insurance agent must exercise reasonable care and skill in performing his duties. And if such a representative fails to do so, he may become liable to those, including his principal, who are caused a loss by his failure to use standard care.”) (citations omitted).

An insurance agent or broker who fails to meet the standard of care under the circumstances may be sued in tort (negligence) or contract. See Popham v. State Farm Mut. Ins. Co., 333 Md. 136, 153 (1993) (“The principal may sue the agent, either in contract or for negligence in the performance of the duty imposed by the contract.”). To establish a valid cause of action in negligence, a plaintiff must prove the existence of four elements: (1) that the agent/ broker was under a duty to protect the plaintiff from injury; (2) that the agent/ broker breached the duty; (3) that the plaintiff suffered actual injury or loss; and (4) that the loss or injury proximately resulted from the agent/broker’s breach of the duty. See Miller, 362 Md. at 387 (citations omitted). In order to recover on a breach of contract claim, a plaintiff must prove that two or more parties formed a contract, that the defendant breached the contract, and that the plaintiff suffered actual damages as a result of the breach. See Parlette v. Parlette, 88 Md. App. 628, 640 (Md. Ct. Spec. App. 1991) (Permitting breach of contract claim against insurance agent by third-party beneficiary of insurance policy).

On the other hand, an agent or broker does not have a continuing, affirmative duty to render unsolicited advice to the insured concerning the advisability or availability of liability coverage in a greater amount than was selected by insured. Rather, “the onus is…squarely on the insured to inform the agent of the insurance he requires.” Sadler supra at 378. Furthermore, “[i]t is the obligation of the insured to read and understand the terms of his insurance policy, unless the policy is so constructed that a reasonable man would not attempt to read it. . . . If the terms of the policy are inconsistent with his desires, he is required to notify the insurer of the inconsistency and of his refusal to accept the condition.” Cooper v. Berkshire Life Ins. Co., 148 Md. App. 41, 61 (Md. Ct. Spec. App. 2002). The failure on the part of the insured to meet this obligation may give rise to a defense of contributory negligence that will serve as an absolute bar to recovery on a negligence claim. See Int’l Bhd. of Teamsters v. Willis Corroon Corp., 369 Md. 724, 738-39 (2001) (“The alleged duty to read the policy also lies at the heart of the contributory negligence defense asserted to a claim of negligence on the part of the broker. If that duty is breached and the breach constitutes at least a contributing cause of the loss complained of—the lack of coverage—there can be no recovery.”).

Chris is a shareholder in our Harrisburg, Pennsylvania office who is admitted to practice in Maryland, New Jersey and Pennsylvania. He can be reached at



Case Law Update: Appellate Division Upholds Dismissal of Claims Against Insurance Broker  

By Martin A. Schwartzberg, Esquire

In a recent decision from the Appellate Division, Third Department, the court upheld the dismissal of negligence, breach of contract and fraud/material misrepresentation claims against an insurance broker. The lawsuit against the insurance broker was commenced after a property owner was sued by a construction worker who fell off of a ladder and obtained a jury verdict against the owner for $6.1 million.

In Cromer v. Rosenzweig Insurance Agency, Inc., 156 A.D.3d 1192 (3d Dep’t 2017), the Appellate Division was asked to address whether the trial court properly granted summary judgment to the insurance broker and dismissed the complaint, which asserted causes of action for negligence, breach of contract and fraud/material misrepresentation. In its decision, the Third Department restated the well-settled rule in New York that an insurance broker has a common law duty to provide requested coverage within a reasonable time and may be held liable for negligence or breach of contract when a client establishes that a specific request was made for coverage that was not provided in the policy.

In support of its motion to the court below, the broker submitted an affidavit that indicated it obtained a quote for the insurance coverage requested. Prior to the submission of an application to bind coverage, the broker sent the owner a letter in which the broker specifically indicated that the quoted policy “did not cover injuries to construction workers.” The letter further stated that in the event the owner was interested in procuring such additional coverage, it could be obtained for an additional $5,000.

In response to its letter, the broker received a fully-executed application for the commercial general liability policy as outlined in the provided quote. At no time did the owner ever request the broker to obtain a policy that covered injuries to construction workers. Notably, the owner testified at his deposition that he was aware that the policy he purchased did not provide coverage for injuries to construction workers. He explained that he did not procure the more expensive policy because he mistakenly believed that the contractor already had procured liability insurance covering his employees.

Based upon the above evidence, the Appellate Court found that the broker met its burden on its motion for summary judgment. In opposition to the motion in the court below, the Appellate Division held that the owner failed to present any credible evidence rebutting the proof submitted by the broker. At best, the owner established that it had made a generalized request for liability coverage and that such a request was insufficient to satisfy the requirement that a specific request for a particular type of coverage be made.

Alternatively, the owner’s attorney argued that a special relationship existed between it and the broker. In this regard, although an insurance broker’s common law duty to his or her clients does not include a continuing duty to advise the clients on appropriate coverage or to recommend additional coverage that the clients did not request, an insurance broker may nevertheless be found liable for failing to provide appropriate advice regarding insurance coverage where it is determined that a special relationship had been established with his or her client. Although whether a special relationship is dependent on the particular facts of the case, factors to be considered are: whether the broker received compensation for his or her consultation services distinct from the payment of premiums; whether the broker and the client had a specific interaction with respect to the insurance coverage such that it was apparent that the client was relying on the advice of the broker; or whether there existed a course of dealing over an extended period of time that would have put an objectively reasonable insurance broker on notice that his or her advice and/or expertise were being relied upon by the client.

The Third Department rejected the owner’s argument that a special relationship existed. Instead, it held that the broker fulfilled any duty that it owed to the owner with the submission of an “unambiguous” letter to the owner advising that additional insurance coverage for injuries to construction workers was available and could be procured upon request and, further, that the owner was aware that injuries to construction workers was specifically excluded from the policy that the owner purchased. As a result, because there was no evidence of any specific request for such additional insurance coverage being procured, the appellate court held that the broker’s motion for summary judgment dismissing the complaint was properly granted by the court below.

Cromer is notable in that it re-emphasizes the high burden that a party has in attempting to establish a viable claim against its insurance broker for malpractice, negligence or breach of contract in New York. It further establishes that an insurance broker fulfills any duty it owes to its client by procuring the specific insurance that was requested, and the broker is obligated to do no more than that unless a special relationship exists. The decision further demonstrates that a party seeking to sue its insurance broker has a similarly difficult burden in establishing that a special relationship exists that would allow the lawsuit to proceed.

Martin is a shareholder in the firm’s Melville, New York 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,
please contact If however you continue to receive the alerts in error, please send a note

ATTORNEY ADVERTISING pursuant to New York RPC 7.1           
 © 2018 Marshall Dennehey Warner Coleman & Goggin. All Rights Reserved.

Affiliated Attorney

Christopher J. Conrad
(717) 651-3531
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

Practice Areas

Before you send this email please note:

You are attempting to send email, through a link on our website, to an attorney of Marshall Dennehey Warner Coleman & Goggin or an employee in our firm. Please note that your email may not be treated as confidential and does not create an attorney-client relationship. You should not rely upon the transmission of an email through this website if you are seeking to enter into such a relationship. Until such time as we have agreed to represent you, no information in your email will be treated as confidential. Please contact us directly by telephone at 1.800.220.3308 if it is your intent to seek legal counsel with our firm or convey confidential information.

If it is still your intent to send this email, knowing that it may not be treated as confidential, you may accept our terms of agreement by pressing "OK". If you choose not to accept these terms of agreement you may navigate away from this page by pressing "Cancel."