Opinion ID: 6501101
Heading Depth: 2
Heading Rank: 3

Heading: Negligent Procurement of Insurance Coverage

Text: The Wobigs also argue that the agent had a duty to know what the policy covered and determine appropriate coverage for all structures on their property. Setting aside the question of the agent’s relationship with Safeco as an independent insurance broker, to establish a negligent procurement of insurance coverage claim against an agent, the insured must prove: (1) the agent owed a duty to exercise reasonable care, skill, and diligence under similar circumstances in procuring insurance; (2) a breach; and (3) the agent’s breach caused the insured’s damages. Graff v. Robert M. Swendra Agency, Inc., 800 N.W.2d 112, 116 (Minn. 2011) (citing 10 Am. Jur. 3d Proof of Facts § 3 (1990)). The question of whether a duty exists is a question of law for the court. Johnson v. Urie, 405 N.W.2d 887, 891 n.5 (Minn. 1987). In the absence of “a contractual undertaking by the agent or broker to provide insurance, the agent or broker has no legal duty toward an insured beyond that specifically undertaken by him or her.” Graff, 800 N.W.2d at 117 (quoting Johnson v. Farmers & Merch. State Bank of Balaton, 320 N.W.2d 892, 898 (Minn. 1982)). An insurance agent’s ordinary duty is limited to following the client’s instructions and acting in good faith. Scottsdale Ins. Co. v. Transp. Leasing/Cont., Inc., 671 N.W.2d 186, 196 (Minn. Ct. App. 2003). That said, if special circumstances are present regarding the transaction and the relationship between the agent and the client, the agent may have a common law duty to affirmatively act by advising, offering, or furnishing coverage. Carlson v. Mut. Serv. Ins., 494 N.W.2d 885, 887 (Minn. 1993); Urie, 405 N.W.2d at 889-90. In order to find special circumstances, the court considers whether the agent knew the insured (1) was unsophisticated with insurance; (2) was relying on the agent to provide appropriate coverage; and (3) needed protection from a specific threat. Gabrielson v. Warnemunde, 443 N.W.2d 540, 544 (Minn. 1989). The Wobigs have failed to demonstrate the agent owed a duty that was breached during the procurement of insurance or that special circumstances exist. -7- Because the agent was never deposed, the record is completely silent as to his knowledge and reasons for acting as he did. There is no evidence in the record to support a claim that Joseph Wobig either relied on the agent to provide appropriate coverage or needed protection from any specific threat. Under these circumstances, there is no genuine issue of material fact that presents a triable issue on the question of negligence. For the same reasons, Safeco is entitled to summary judgment on the Wobigs’ breach of warranty for a particular purpose claim. See Driscoll v. Standard Hardware, Inc., 785 N.W.2d 805, 817 (Minn. Ct. App. 2010) (“An implied warranty of fitness for intended use arises if a seller, at the time of a contract, has reason to know that the buyer has a particular purpose for the goods purchased, and the buyer relies on the seller’s judgment or skill to select those goods.”) (citing Minn. Stat. § 336.2-315 (2008)).