You tell an insurance agent exactly what you need. They say it’s handled. Later, a loss occurs, and you find the policy doesn’t cover it. That is the heart of a negligence claim against an agent or broker. The law is clear. When an agent breaks a duty, they are responsible for your losses.
An agent’s job is not just to sell policies. Once you request coverage, they must act with reasonable care. That means obtaining the coverage you asked for within a reasonable time, or telling you they cannot. If they say they did the job but did not, you have been harmed by their carelessness.
The most common negligence claim is failure to procure coverage. That happens when an agent promises a policy, takes your premium, but never gets it issued. Or the agent gets a policy that is not what you asked for. For example, a restaurant owner asks for food-borne illness coverage. The agent says yes, then delivers a general liability policy that excludes it. When a customer gets sick, the owner finds the gap. That is negligence.
Another scenario is the agent who fails to advise you of a lapse. You have a policy that is about to expire. The agent says they will renew it. They do not. Your coverage drops, and you do not know until a loss happens. That is also clearly a failure to procure. The agent had a clear duty to make sure the renewal happened, or at least to tell you it did not.
To win a negligence case against an agent, you have to prove more than just a bad outcome. You have to show that the agent’s conduct fell below the standard of care. In practice, that means showing what a reasonable agent would have done in the same situation. If a reasonable agent, when asked for a specific type of coverage, would have confirmed it was included in the policy, then your agent’s failure to do that is negligent. You also have to show causation. That means proving that if the agent had done their job, you would have had the coverage you needed, and you would not have suffered the financial loss. This is often the hardest part. You have to show that the policy you wanted was available and that you would have been eligible for it. If you have a prior record of claims or a dangerous activity, the insurer might have rejected you anyway. Then the agent’s negligence did not cause your loss.
The difference between an insurance agent and an insurance broker matters here. An agent typically represents the insurance company. They have a contract with the insurer to sell its policies. A broker represents you, the buyer. They are supposed to shop around and find the best coverage from any insurer. But the law does not treat this as a huge distinction when it comes to negligence. Both owe you a duty of reasonable care. Both can be sued for failing to get you the coverage they promised. The key difference is that a broker’s duty may be broader because they are working for you, not the insurer. A broker who fails to search the market and find you the coverage you need is just as negligent as an agent who sells you the wrong policy.
There are common defenses that agents use. One is that you, the insured, never read your policy. The agent might say, ’The policy was right there. You should have seen that the flood coverage was missing.’ That defense works in some cases, but not always. If the agent told you the policy included flood coverage, and you relied on that verbal statement, the agent cannot hide behind your failure to read a confusing document. Another defense is that you did not give a clear request. If you just said ’get me some insurance,’ the agent is not a mind reader. But if you said ’I need coverage for my home-based business,’ and the agent bought you a personal homeowners policy that excludes any business activity, that is a failure to procure.
