Folks buy insurance to minimize loss in the event of occurrences that may cause injury to individuals or property. I would venture to say that most of the time, insureds do not read their policies and do not know the precise coverages they have purchased. While sometimes insurance is purchased directly from a carrier, many insureds rely on insurance agents or brokers to, inter alia, procure insurance for them. What happens, however, when a casualty occurs and the insured finds out that the desired coverage was not procured by the broker? This question is a fertile source of litigation, and today’s article addresses some of the issues relevant to the answer.
“Insurance agents have a common-law duty to obtain requested coverage for their clients within a reasonable time or inform the client of the inability to do so: however, they have no continuing duty to advise, guide or direct a client to obtain additional coverage.” American Bldg. Supply Corp. v. Petrocelli Group, Inc., 19 N.Y.3d 730, 735 (2012) (citation, internal quotation, internal quotation marks and brackets omitted). This is because the “insurance agent-insured relationship is not a generally recognized professional relationship in which continuing obligations to advise might exist but, rather, is an ordinary commercial relationship which does not usually give rise to a duty to provide such ongoing guidance.” Marcellus Energy Services LLC v. Tompkins Insurance Agencies, Inc., 238 A.D.3d 1366, 1368 (3rd Dep’t 2025).
“An insurance broker may be held liable under theories of breach of contract or negligence for failing to procure insurance upon a showing by the insured that the agent or broker failed to discharge the duties imposed by the agreement to obtain insurance, either by proof that it breached the agreement or because it failed to exercise due care in the transaction.” DaSilva v. Champ Construction Corp., 186 A.D.3d 425 (2nd Dep’t 2020) (citations omitted). To establish that an insurance broker breached its contract or was negligence, “a plaintiff must establish that a specific request was made to the broker for the coverage that was not provided in the policy.” Gibraltar Contracting, Inc. v. P.F. Northeast Brokerage, Inc., 189 A.D.3d 432 (1st Dep’t 2020) (emphasis supplied) (citation omitted). “A general request for coverage will not satisfy the requirement of a specific request for a certain type of coverage.” Hoffend & Sons, Inc. v. Rose & Kiernan, Inc., 7 N.Y.3d 152, 158 (2006).
In Ewart v. Allstate Ins. Co., 221 A.D.3d 968 (2nd Dep’t 2023), an insurance agent was awarded summary judgment dismissing a complaint sounding in breach of contract and negligence by “establish[ing], prima facie, that [the agent] communicated multiple quotes to the [potential insured] and that the [potential insured’s] failure to respond demonstrated a lack of initiative or personal indifference that resulted in a failure to obtain coverage.” Id. at 969 (citations and internal quotation marks omitted).
In American Bldg., the Court rejected the broker’s claim that the plaintiff should be barred from recovery because it received a copy of the policy, did not read it, and did not complain about its contents. Nonetheless, the Court held that, notwithstanding the absence of specific requested coverages, failure to read the policy should not foreclose plaintiff from suit. American Bldg., 19 N.Y.3d at 736. The Court noted that: “[w]hile it is certainly the better practice for an insured to read its policy, an insured should have a right to look to the expertise of its broker with respect to insurance matters [and t]he failure to read the policy, at most, may give rise to a defense of comparative negligence but should not bar, altogether, an action against a broker.” Id. at 736-77
In addition to common-law theories of recovery, liability against a broker may be found “where a special relationship develops between the broker and client.” Voss v. Netherlands Ins. Co., 22 N.Y.3d 728 (2014). If such a special relationship is found, liability against a broker may exist “even in the absence of a specific request, for failing to advise or direct the client to obtain additional coverage.” Id. at 735 (citations omitted). Thus, in certain “situations may arise in which insurance agents, through their conduct or by express or implied contract with customers and clients, may assume or acquire duties in addition to those fixed at common law” and that the question of whether such additional responsibilities should be “given legal effect is governed by the particular relationship between the parties and is best determined on a case-by-case basis.” Id. (citation and internal quotation marks omitted). “[A]n additional duty of advisement” may arise in special circumstances where, for example, “(1) the agent receives compensation for consultation apart from payment of the premiums; (2) there was some interaction regarding a question of coverage, with the insured relying on the expertise of the agent; or (3) there is a course of dealing over an extended period of time which would have put objectively reasonable insurance agents on notice that their advice was being sought and specially relied on.” Murphy v. Kuhn, 90 N.Y.2d 266, 272 (1997) (citations omitted); see also Voss, 22 N.Y.3d at 735 (relying on Murphy). The Court of Appeals recognized that expanding the scope of liability for insurance agents and brokers was not advisable because, in addition to “opening the flood gates” to litigation, “[i]nsurance agents or brokers are not personal financial counselors and risk managers, approaching guarantor status [and i]nsureds are in a better position to know their personal assets and abilities to protect themselves more so than general insurance agents or brokers, unless the latter are informed and asked to advise and act.” Id. at 273 (citations omitted).
On August 13, 2025, the Appellate Division, Second Department, decided SPA Castle, Inc. v. Choice Agency Corp., a case addressing some of the issues discussed herein. In SPA, Plaintiffs commenced an action against a broker for breach of contract because, according to the plaintiff, the broker failed to procure “appropriate insurance coverage.” The trial court denied the broker’s motion for summary judgment, and it appealed.
The Second Department, finding that the plaintiff never made a specific request for insurance, reversed and stated:
Here, the defendant established its prima facie entitlement to judgment as a matter of law dismissing the complaint insofar as asserted against it by submitting, inter alia, transcripts of the deposition testimony of the plaintiffs’ CEO and president and the defendant’s vice president of operations, which demonstrated that the plaintiffs did not make a specific request for a particular kind of insurance coverage that the defendant failed to procure. The plaintiffs’ CEO and president testified, among other things, that he did not remember discussing specific risks that the plaintiffs were seeking to insure against, but that the plaintiffs needed general liability insurance. The defendant’s vice president of operations testified that the plaintiffs’ application was for general liability insurance, which the record reflects is the kind of insurance the defendant procured for the plaintiffs. In opposition, the plaintiffs failed to raise a triable issue of fact.
