Over the past several weeks, I have written about agent negligence cases in various jurisdictions. Chip Merlin touched on the subject as well in his recent post, Establishing Duty is the Key to Agent Negligence Case. Because establishing the duty is so important, I want to take a look at another case that illustrates an insured’s failure to meet their burden.
In Amling v. State Farm Insurance Co., No. 10-1130, 2011 WL 1584215 (Ct. of App. Iowa Apr. 27, 2011), the Amlings purchased insurance from State Farm for their ranch home in 1998. In 2004, they added a sunroom to their home, but never increased the coverage amount of their insurance policy. In 2006 a fire completely destroyed their home, resulting in damages that exceeded their policy limits. While State Farm paid the full policy limits, the Amlings claimed they relied on their agent to properly assess their insurance needs and they were not adequately insured.
The court applied the rationale used in Langwith v. Am. Nat’l Gen. Ins. Co., 793 N.W. 2d 215 (Iowa 2010), and stated:
The client bears the burden of proving an agreement to render services beyond the general duty to obtain the coverage requested. In the absence of circumstances indicating the insurance agent has assumed a duty beyond the procurement of the coverage requested by the client, the insurance agent has no obligation to advise a client regarding additional coverage or risk management.
The court also stated:
Some of the circumstances that may be considered by the fact finder in determining the undertaking of the insurance agent include the nature and content of the discussions between the agent and the client; the prior dealings of the parties, if any; the knowledge and sophistication of the client; whether the agent holds himself out as an insurance specialist, consultant, or counselor; and whether the agent receives compensation for additional or specialized services.
The Amlings were unable to provide any evidence that their agent held himself out as a specialist, consultant, or counselor. They also failed to show that he received any special compensation for additional or specialized services. The Amlings relied mostly on their long-standing relationship with their agent to establish a greater duty, but the court recognized that they never asked their agent for advice about how much coverage they needed and determined that the long-standing relationship, without more, was insufficient to place a greater duty on the agent. Consequently, their case was dismissed showing, yet again, the importance of establishing duty in agent negligence cases.
Keep in mind, this holding is based on Iowa law. The law in other jurisdictions may vary as to establishing an agent’s duty.