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21 Hamline L. Rev. 9 (1997-1998)
An Insurance Agent's Legal Duties to Customers

handle is hein.journals/hamlrv21 and id is 19 raw text is: ARTICLES

R.D. Blanchard'
This article examines the basis for holding an insurance agent liable to
an insurance customer for failing to advise the customer to buy additional
liability insurance to cover a loss that subsequently materializes. Whether an
insurance agent has any duty to advise an insured to buy additional coverage
depends upon whether the agent and customer have a special relationship
between them. Therefore, the article examines the meaning of a special rela-
tionship and how it may be created. The purpose of the article is to explain
the proper legal analysis for determining whether an agent should be held
liable to a customer for not recommending additional coverage. This type of
claim against an insurance agent is always complicated by the fact that the
additional insurance, which could have protected the insured against a seri-
ous loss, was relatively inexpensive. Although the discussion centers on
Minnesota law and cases, the proposed legal analysis should apply in all
states. The analysis is based upon the authors' experience in handling numer-
ous insurance agent cases'in state and federal courts.
Too often, insureds buy only a minimum of liability insurance, leaving
various potential risks and losses uninsured. They usually choose a mini-
mum of coverage to keep their premiums low. But when an uninsured loss
occurs and a claim is made against the insured, the reality of being underin-
sured or uninsured may be devastating. Some insureds are inclined to blame
their selling-agents for not requiring them to buy additional coverage or, at
least, recommending the additional coverage. The insureds usually rational-
ize that the selling-agent knows all about insurance, and the customer knows
hardly anything about insurance, so the selling-agent should have deter-
mined what coverages the insured should have bought. Of course, the
insured is absolutely certain that he or she would have purchased the addi-
tional coverage if the agent had recommended it. The insured fails to con-
sider the fact that most selling-agents know very little about their insureds'
circumstances, how much money they are really willing to spend on insur-
ance and what risks they are willing to assume. Ordinarily, the selling-agent
would like to sell as much insurance as possible to their customers. Indeed,
I.  Mr. Blanchard practices insurance law as apartner with Meagher & Geer in Minneapolis, Minnesota.

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