Opinion ID: 476878
Heading Depth: 2
Heading Rank: 1

Heading: Esser's Relationship to Lazzara

Text: 6 The district court correctly held that, as a matter of law, Esser acted as an insurance broker for the purposes of acquiring and maintaining automobile insurance for Lazzara, rather than as an agent for the insurer. Thus Esser was acting as Lazzara's agent and had a duty to act in good faith and with reasonable care, skill and diligence in compliance with Lazzara's instructions. 7 Although the question whether an insurance broker is the agent of the insured or the insurer is generally one of fact, when the evidence clearly shows that the broker is the agent of the insured, it becomes a matter of law. See Davidson v. Comet Casualty Co., 89 Ill.App.3d 720, 723, 44 Ill.Dec. 943, 946, 412 N.E.2d 19, 22 (1980); Ross v. Thomas, 45 Ill.App.3d 705, 708, 4 Ill.Dec. 379, 381, 360 N.E.2d 126, 128 (1977); Galiher v. Spates, 129 Ill.App.2d 204, 207, 262 N.E.2d 626, 628 (1970). 8 The Illinois courts have defined an insurance broker as: 9 [O]ne who procures insurance and acts as middleman between the insured and the insurer, and solicits insurance business from the public under no employment from any special company, but, having secured an order, places the insurance with the company selected by the insured, or, in the absence of any selection by him, with the company selected by such broker. 10 Galiher, 129 Ill.App.2d at 206-07, 262 N.E.2d at 628; see, e.g., City of Chicago v. Barnett, 404 Ill. 136, 141-42, 88 N.E.2d 477, 481 (1949); Davidson, 89 Ill.App.3d at 722-23, 44 Ill.Dec. at 946, 412 N.E.2d at 22; Browder v. Hanley Dawson Cadillac Co., 62 Ill.App.3d 623, 628-29, 20 Ill.Dec. 138, 142, 379 N.E.2d 1206, 1210 (1978). An insurance agent, on the other hand, has a fixed and permanent relationship to an insurance company that the agent represents and has certain duties and allegiances to that company. See Roby v. Decatur Steel Erectors, Inc., 59 Ill.App.3d 720, 725, 17 Ill.Dec. 71, 75, 375 N.E.2d 1355, 1359 (1978); Galiher, 129 Ill.App.2d at 207, 262 N.E.2d at 628. Whether a person is an agent or a broker is determined by his or her acts. See City of Chicago v. Barnett, 404 Ill. at 141-42, 88 N.E.2d at 481 (1949); Browder, 62 Ill.App.3d at 629, 20 Ill.Dec. at 142, 379 N.E.2d at 1210; Galiher, 129 Ill.App.2d at 207, 262 N.E.2d at 628. 11 Some of the Illinois appellate courts have applied four criteria in determining whether an intermediary is an agent or a broker: (1) who called the intermediary into action; (2) who controls its actions; (3) who pays it; 1 and (4) whose interests does it represent. See Browder, 62 Ill.App.3d at 629, 20 Ill.Dec. at 143, 379 N.E.2d at 1211; Roby, 59 Ill.App.3d at 725, 17 Ill.Dec. at 75, 375 N.E.2d at 1359. 12 The evidence clearly shows that Esser was acting as a broker for Lazzara. Esser had served as Lazzara's broker for many years. The evidence establishes that Esser acted to protect Lazzara's interest and that Lazzara controlled its actions. Lazzara called Esser into action by requesting that Esser procure additional automobile insurance. Lazzara did not direct Esser to obtain the insurance coverage from a specified insurer, but rather relied on Esser's judgment. Nor was Esser obliged to obtain the coverage from any particular insurer. Further, by prior agreement, Esser was to maintain the insurance coverage until otherwise notified. Esser in fact did maintain the coverage for a period of time by renewing the policies. Esser's actions thus belie its claim that its agency relationship with Lazzara ended once it procured the initial policies. 2 13 In light of such clear evidence showing that Esser was an agent for Lazzara for the purpose of procuring and maintaining automobile insurance, Esser's argument that its agency agreement with the insurance companies and the fact that the companies paid its commissions raise an issue of fact must fail. The agency agreement does not establish a fixed or permanent relationship between the insurers and Esser for the purpose of acquiring and maintaining insurance. 3 Esser was permitted to solicit from any person it desired, was not required to broker a particular amount of business annually and was not paid a salary. It had no allegiance to any insurance company. It was permitted to, and in fact did, enter into such agency agreements with other companies. 14 Hartford Accident & Indemnity Co. v. Northwest National Bank, 228 F.2d 391 (7th Cir.1955), upon which the defendant relies, is distinguishable. In Hartford we held that the party at issue was an agent for the insurer, rather than a broker, for the purpose of attributing knowledge of the agent to the insurer. The agent had entered into an agency agreement with the insurer that granted him the same powers as the agency agreement between Esser and Reliance. In Hartford, however, there is no indication that the agent had an arrangement with any insurance company other than Hartford. In fact, the name Hartford Agency appeared on his office door. Further, the agent did not have a long-standing arrangement with the insured under which he was to protect the insured's interests.