It is imperative that the party responsible for procuring insurance know what is in the policy, how claims are made and whether prior acts are covered. In many states, an insurance broker will not be responsible for advising the insured as to the coverage needed, unless there is a special relationship between insured and broker. A broker familiar with various policy provisions and can provide advice and pricing options, but may not know an insured’s particular circumstances. Whether adequate coverage has been procured should be confirmed by a comprehensive review of the actual policy language. If the insured wants to additionally obtain risk management services, that likely needs to be part of a separate agreement.
These issues played out recently in Perreault v. AIS Affinity Ins. Agency of New England, Inc., No. 17-P-1139 (Mass. App. Ct. Aug. 2, 2018). Here the Massachusetts Appeals Court considered the scope of an insurance broker’s duty in placing a legal malpractice policy. The court held that under the circumstances, the broker (AON) did not have a “special relationship” with the attorney based on the duration and nature of their relationship, and therefore had no obligation to do other than obtain the policy the attorney asked him to buy.