Opinion ID: 852499
Heading Depth: 3
Heading Rank: 3

Heading: Claims for Failure to Advise as to Coverage

Text: Insurance agents potentially have both a general duty of care and a duty to advise their clients. Which duty governs in a particular case is a matter of law. Am. Family Mut. Ins. Co. v. Dye, 634 N.E.2d 844, 848 (Ind.Ct.App.1994), trans. denied. [T]he law in Indiana is settled: an insured must demonstrate some type of special relationship for a duty to advise to exist. Craven v. State Farm Mut. Auto. Ins. Co., 588 N.E.2d 1294, 1297 n. 5 (Ind.Ct.App.1992). As to the appropriate coverage, the Filips do not argue that they are entitled to a determination of a special relationship, but seek to describe the duty of care broadly to include the obligation to identify the insured's desires with regard to insurance and explain to the insureds various coverages available to meet those desires. The Filips are essentially arguing the duty to advise under the guise of the general duty of care. The facts of this case do indicate, however, that Block may have assumed a duty to advise with regard to the nonbusiness personal property coverage. The undisputed evidence is that the Filips requested the same coverage as their predecessor. In the absence of a special duty, [a]n insurance agent who undertakes to procure insurance for another is an agent of the insured and owes the insured a general duty to exercise reasonable care, skill, and good faith diligence in obtaining insurance. Am. Family Mut. Ins. Co., 634 N.E.2d at 847; see generally 16 Indiana Law Encyclopedia, Insurance §§ 51-52, at 204 (West 1999) (An insurance agent owes his or her clients a duty to exercise reasonable care in servicing their insurance needs.). Included in this general duty is a duty of care to procure the insurance asked for by the potential insured. See generally 43 Am.Jur.2d Insurance §§ 161-163, at 202 (2003) (A broker or agent who accepts an order to insure must follow the customer's instructions.). The agent does not have a duty, however, to tell the potential insured about the adequacy of the coverage or any alternative coverage that is available. See generally Lee R. Russ, 4 Couch on Insurance § 55:5, at 55-10, -12 (3d ed. 1995) (The general duty of the insurer's agent to the insured is to refrain from affirmative fraud, not to watch out for all rights of the insured and inform the latter of them. . . . [I]nsurer's agents are not required under a general duty of care to advise the insured regarding the sufficiency of coverage limits or replacement value of insured's home.). Similarly, the Court of Appeals has held that in the absence of a special relationship an agent has no duty to advise of the availability of a particular form of coverage. [3] We agree there is no such expansive duty if, as here, the insured identifies the desired coverage. The Filips argue that Block had a duty to inform them of the availability of separate coverage for their nonbusiness personal property, and point to their testimony that Block promised to visit Sundown. A visit would presumably have indicated lack of coverage of the nonbusiness personal property, and perhaps triggered some discussion of the adequacy of their limits or other coverages. Although in general an agent does not have a responsibility to tell any potential insureds about the availability of different coverage options or to visit the premises, the Filips assert that they relied on Block's assertion regarding the coverage of their personal property, and her promise to visit the premises. Accordingly, there is a material question of fact as to whether Block assumed a special relationship, obligating her to advise the Filips at least as to inadequate coverage of the nonbusiness personal property. If there was a breach, however, it occurred in 1999, and there is no evidence that Block undertook an ongoing review of the Filips' insurance needs. The Filips requested changes in limits in subsequent years, but did not change their personal property coverage. There is thus no evidence of a special relationship imposing a duty on Block to review and advise as to adequacy of coverage within the statute of limitations.