Opinion ID: 2540396
Heading Depth: 2
Heading Rank: 1

Heading: Fiduciary Duty is Part of Broker-Insured Relationship

Text: It is helpful to understand the difference between an insurance agent and an insurance broker such as Marsh. An insurance agent works for and acts as an agent for a particular insurer or insurers. By definition an insurance agent is ordinarily `an agent of the insurer' and not an agent of the insured. Graue v. Missouri Prop. Ins. Placement Facility, 847 S.W.2d 779, 783 (Mo. banc 1993), quoting § 375.012(4), RSMo 1986. A general agent for the insurer usually will be able to enter into contracts binding the insurer and accept premiums. Id. at 784. While an agent represents the insurer, an insurance broker, unless otherwise authorized and provided, represents the insured and, unless otherwise shown by the evidence, is to be regarded as the agent of the insured. Gilbert v. Malan, 231 Mo.App. 469, 100 S.W.2d 606, 612 (1937). When an insurance broker agrees to obtain insurance for a client, with a view to earning a commission, the broker becomes the client's agent and owes a duty to the client to act with reasonable care, skill, and diligence. A.G. Edwards & Sons, Inc. v. Drew, 978 S.W.2d 386, 394-95 (Mo.App.1998); accord, Hecker v. Missouri Prop. Ins. Placement Facility, 891 S.W.2d 813, 816 (Mo. banc 1995); Restatement (Third) of Agency § 8.08 (2006) (Subject to any agreement with the principal, an agent has a duty to the principal to act with the care, competence, and diligence normally exercised by agents in similar circumstances.). As is the case with other agents, this means a broker is a fiduciary with respect to matters within the scope of his agency. Bunting v. Koehr, 865 S.W.2d 351, 353 (Mo. banc 1993), quoting Restatement (Second) of Agency, § 13. [5] The scope of the agency of either an agent or a broker normally is limited to procuring the insurance requested by the insured. Busey Truck Equip., Inc. v. Am. Family Mut. Ins. Co., 299 S.W.3d 735, 739 (Mo.App.2009); Kap-Pel Fabrics, Inc. v. R.B. Jones & Sons, Inc., 402 S.W.2d 49, 53 (Mo.App.1966). If a broker is asked to procure particular insurance but fails to do so or fails to inform the insured that the delivered policy is not the one requested so that the insured can make a knowledgeable decision whether to accept the policy or pursue other insurance, the broker has breached its fiduciary duty to exercise reasonable care, skill and diligence in procuring insurance. [6] But neither agents nor brokers have a duty to advise the insured on its insurance needs or on the availability of particular coverage, unless they specifically agree to do so. See, e.g., Jones v. Kennedy, 108 S.W.3d 203, 208 (Mo.App. 2003) (reaffirming that an agent has no duty . . . to inform [the insured] of the availability and advisability of obtaining particular coverage); Manzella v. Gilbert-Magill Co., 965 S.W.2d 221, 226-27 (Mo. App.1998) (holding insurance agent has no duty to advise insured of amount of insurance necessary to cover all potential losses); Farmers Ins. Co., Inc. v. McCarthy, 871 S.W.2d 82, 85-87 (Mo.App.1994) (finding insurance agent has no duty to inform insured of existence of optional underinsured motorist coverage).