Guess what? Your insurance broker does not owe you a duty to get you the insurance coverage you need on a project. According to a recent California Court of Appeal case, San Diego Assemblers, Inc. v. Work Comp For Less Insurance Services, Inc. (2013) 220 Cal.App.4th 1363, an insurance broker is only obligated to procure the insurance you ask for, not necessarily the insurance you need.
Prior to beginning construction, San Diego Assemblers (Assemblers) contacted Work Comp For Less (the broker) to get general liability coverage for a restaurant remodel project. The broker procured policies and provided them to Assemblers. After the project was completed, an explosion and resulting fire occurred at the restaurant. Assemblers tendered the claim to its two insurance carriers; both denied coverage, essentially telling Assemblers that one policy had an exclusion for damages first manifesting during the policy and the other had an exclusion for prior completed work. In English, the two policies together didn’t cover any of Assemblers’ work on the project.
Although Assemblers told the broker that it needed insurance specifically for the remodel project, the policies the broker sold Assemblers did not actually cover Assemblers’ work. In essence, the broker sold Assemblers the wrong policies. Nevertheless, the court held that the broker did not owe a duty to Assemblers to determine what kind of coverage was needed, but rather only owed a limited duty to “use reasonable care, diligence, and judgment in procuring the insurance requested by [the] insured.”
The moral of the story? Know what kind of insurance you need; your broker doesn’t owe you a duty to find out for you.