/>iLawsuits against insurance brokers may arise from clients alleging that they depended upon the broker to procure insurance to cover a particular risk or provide prudent advice about what insurance they need to purchase. However, the duties owed by an insurance broker are not universal and vary widely by jurisdiction.
Those duties and other ancillary factors can be meaningful in determining whether an insurance broker is considered a "professional" under the law. For example, to be a "professional" under Florida law, a person must be licensed and hold a four-year undergraduate degree. While a broker is licensed, the educational requirement does not exist in Florida, so an insurance broker is not a "professional" occupation under common law in that state. Meanwhile, in New Jersey, there is no question that an insurance broker is recognized as a "professional" occupation. In that state, the courts have held that the specialized knowledge insurance brokers possess creates a fiduciary duty on the part of the broker to properly advise and procure insurance for policyholders. A broker's mistake is considered "essentially one of professional malpractice."
In other states, the issue is less clear. This lack of clarity creates a fundamental question when instructing a jury on the proper standard of negligence to consider in a negligence lawsuit brought against an insurance broker. In particular, the issue is whether the jury should adjudge the question of the broker's negligence based upon a standard of ordinary care by any person or whether the jury should decide the question of the broker's negligence based upon a standard of care for a professional in the field. This determination becomes a key issue at trial for two reasons.
First, meeting an "ordinary care" standard may prove easier than meeting a professional care standard. Thus, using the proper standard could determine whether the broker breached a duty to the policyholder in a particular case. For example, under the lower standard, a broker may not have breached a duty of care to the policyholder if the broker used the reasonable care of an ordinary person. In comparison, it may be that the broker did not meet the higher standard of reasonable care required of someone in the insurance broker profession. Under this scenario, it would behoove the insurance broker to argue for the lower ordinary care standard for negligence rather than the professional care standard since it is easier to meet.
Second, under the higher professional care standard, expert testimony may be necessary to prove a case for professional negligence on the part of an insurance broker. If the higher standard of care is in play and the plaintiff fails to secure a liability expert, or if the liability expert chosen by the plaintiff is unqualified to opine regarding an insurance broker's standard of care, then the case against the broker could be thrown out on a summary judgment motion or result in a directed verdict at trial. Under this scenario, it would be wise for the insurance broker to argue for the higher professional standard of care against the negligence claim versus the ordinary care standard because of the need for adequate expert testimony.
Therefore, it is essential in an insurance broker negligence case to understand whether the law of the state where the claim is brought clearly determines whether the insurance broker is a professional. If there is no clear answer to the question, then in defending an insurance broker against a negligence claim, one ought to strategically determine whether or not it benefits the insurance broker to be considered a professional for purposes of the litigation.
