Insurance Broker Liability: What Constitutes a ‘Special Relationship’?

New York Law Journal

PUBLISHED ON: May 8, 2013

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In the wake of a storm such as Sandy, New Jersey law makes it feasible for a policyholder to assert a claim against its insurance broker for damages arising as a result of the broker’s failure to procure flood insurance. Is such an action sustainable in New York?

New York law on broker liability is in transition, but it begins with the well-settled principle that “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.” Murphy v. Kuhn, 90 N.Y.2d 266, 270 (N.Y. 1997). Courts, however, are examining other duties of brokers that arise when the policyholder requests specific coverage or when the policyholder and broker have a special relationship.