The Mississippi Supreme Court granted summary judgment in favor of an insurer and its agent on a third-party beneficiary’s negligence claim for failure to procure sufficient coverage. Emerald Coast Finest Produce Company, Inc. v. Sunrise Fresh Produce, LLC, 2015 WL 9461494 (S.D. Miss. Dec. 23, 2015).
The owner of a building sued the tenant’s insurer and a successor in interest to the insurance agency that procured coverage, alleging it was a third-party beneficiary to the tenant’s insurance policy. The tenant was required under the lease to “provide and keep in force fire and extended coverage property damage insurance on the Premises equal to 100% of the replacement value of the building.” The insurer and the agency’s successor moved for summary judgment, alleging that the owner of the building did not have standing to sue as a third-party beneficiary.
The Mississippi Supreme Court found that the allegations of negligent failure to procure sufficient coverage hinges on the issue of whether a third-party beneficiary of a policy may assert a negligence claim against the insurer and/or its agent arising from the policy’s procurement, rather than its fulfillment. Under Mississippi law, a third party may maintain an action as a third-party beneficiary to enforce a promise made for its benefit; however, this right must spring from the terms of the contract. The Court held that the insurer and its agent owed no duty under the policy to procure a certain amount of insurance.