Opinion ID: 476878
Heading Depth: 2
Heading Rank: 2

Heading: Fiduciary Obligations

Text: 15 Esser argues that even if it was Lazzara's agent there is a genuine issue of fact as to whether it breached its fiduciary obligations. We agree with the district court that there is no genuine issue of fact. An insurance broker is liable for any loss sustained by the principal if the broker fails to procure insurance or does not follow instructions when obligated to do so (including instructions about maintaining a policy), or if the policy obtained is void or materially defective through the broker's fault, or if the principal suffers damage by reason of any mistake or act of omission or commission of the broker. See Clear-Vu Packaging, Inc. v. National Union Fire Insurance Co., 105 Ill.App.3d 671, 675, 61 Ill.Dec. 212, 215, 434 N.E.2d 365, 368 (1982); Omni Overseas Freighting Co. v. Cardell Insurance Agency, 78 Ill.App.3d 639, 642-43, 33 Ill.Dec. 779, 782, 397 N.E.2d 112, 115 (1979); Pittway Corp. v. American Motorists Insurance Co., 56 Ill.App.3d 338, 346-47, 13 Ill.Dec. 244, 250, 370 N.E.2d 1271, 1277 (1977); Johnson v. Illini Mutual Insurance Co., 18 Ill.App.2d 211, 216, 151 N.E.2d 634, 637 (1958); Johnston v. Otta, 340 Ill.App. 270, 275-76, 91 N.E.2d 468, 471 (1950). The broker is obligated to act in good faith and with reasonable care, skill and diligence in transacting the business of the principal. See Omni, 78 Ill.App.3d at 643, 33 Ill.Dec. at 782, 397 N.E.2d at 115; Pittway, 56 Ill.App.3d at 346-47, 370 N.E.2d at 1271. Thus Esser breached its fiduciary duties to Lazzara because it failed to maintain the coverage that it had been instructed to maintain. 16 Esser argues that the plaintiff cannot prevail on summary judgment because there is no evidence that Esser ordered the reduced coverage or that uninterrupted coverage was available. These considerations, however, are irrelevant. At the very least Esser had a duty to inform Lazzara that the policies no longer provided the full amount of coverage that Lazzara had instructed Esser to obtain. We have held that 17 [I]n the case of a broker who has agreed to seek renewal of a policy, it is immaterial whether the insurer would renew the policy. Inherent in the obligation to seek continuation of an insurance policy is the duty to notify the applicant if the insurer declines to continue [to insure] the risk, so the applicant may not be lulled into a feeling of security or put to prejudicial delay in seeking protection elsewhere. Talbot v. Country Life Insurance Co., supra, 8 Ill.App.3d [1062,] 1065, 291 N.E.2d [830,] 832. 18 Prince v. Royal Indemnity Co., 541 F.2d 646, 650 (7th Cir.1976), cert. denied, 429 U.S. 1094, 97 S.Ct. 1108, 51 L.Ed.2d 540 (1977); see Wheaton National Bank v. Dudek, 59 Ill.App.3d 970, 972, 17 Ill.Dec. 487, 489, 376 N.E.2d 633, 635 (1978). Similarly, the reasons why Reliance lowered its policy limits are irrelevant to the question whether Esser breached its fiduciary duties.