When an insurance claim is denied, and you believe you had or should have had coverage, it doesn't necessarily mean the insurance company's denial was wrongful. Sometimes there is a lack of coverage, or a basis for denial, despite the insureds reasonable expectation of coverage. This disconnect may exist because an insurance agent was negligent in securing coverage or assisting with a claim. In California, where agent negligence causes the loss of policy benefits, a claim may lie against the agent for the amount of lost benefits.
When many people buy insurance, they use an insurance agent to help find coverage that meets their needs. The insurance agent often interviews a person about their insurance needs, finds a suitable policy from a suitable company, and assists with the application for that policy. In addition, when an insurance claim is made, the insurance agent is often the entity that receives the claim and forwards it to the insurance company, and otherwise assists with the processing of a claim. Oftentimes, people have the same insurance agent for many years, who they rely on to get them the requested insurance coverage for different purposes.
Insurance agent negligence occurs in many contexts. For instance, when an insurance company denies a claim based on a lack of coverage or an exclusion, for a risk that you asked your agent to get you coverage for, there may be agent liability for negligence. The basis of such a claim is the agent's negligence in procuring the requested insurance coverage for you. Similarly, if the agent misstates the coverage the policy provided, that can also serve as the basis for a claim for negligent misrepresentation. Likewise, where an agent holds himself as an expert in a particular insurance policy or coverage, California law imposes a higher duty to advise insureds about the policy or coverage. An agent negligence claim can be brought for the agent's failure to competently advise the insured in those circumstances. In addition, if your policy limits are not large enough to cover a loss, even if there is coverage, that also may give rise to a negligence claim in certain circumstances. Another common area where agents negligence can occur are inaccurate statements in the policy application. Agents frequently fill out or assist the insureds with the policy application when the policy is first purchased. The insurance company may later, following submission of a claim, rely on alleged misstatements in the policy application to rescind the policy or deny coverage. Agent negligence can also arise if they fail to transmit notice of a claim, or engage in other acts during the claims process which damage the insureds ability to receive policy benefits.
The insurance agent's job is to obtain the insurance that the insured requested, and to assist the insured with his or her insurance needs. Where they fail to do so, or commit an error in attempting to do so, which later prevents the insured from obtaining policy benefits, a claim for agent negligence may exist.
If you have had a claim denied or limited, and you believe that it was caused by agent negligence, and would like to discuss the issue, please contact or call us.