A New York and New Jersey Lawyer Who Represents Policyholders and Beneficiaries in Life Insurance Denial Cases

A New York Supreme Court ruled in favor of an insurance broker who was sued by its client after a workers’ compensation coverage purchase did not turn out as expected, with the insured on the hook for the self-insured trust’s liabilities.

The decision, which specifically came out of the Kings County Supreme Court, is Consolidated Bus Transit, Inc. v. The Treiber Group, LLC.

Joseph Curcio owned several bus companies and Treiber Group was his insurance broker. Treiber presented three different options for workers’ compensation insurance and Curcio opted to enroll in a self-insured trust administered and underwritten by a separate company. To make a long story short, the trust became insolvent and its members incurred hefty assessments so the trust could meet its obligations.

Curcio then commenced an action against Treiber alleging, among other claims, that it knew or should have known that the trust was grossly mismanaged or in danger of insolvency, misled him into enrolling in the trust so that Treiber could receive a higher commission than it otherwise would have received from different products, and that Curcio relied on Treiber’s advice when he enrolled in the trust. (The legal theories were breach of fiduciary duty, fraud, negligence and negligent misrepresentation).

Insurance agents have a duty to obtain requested coverage for their clients or inform them of an inability to do so, but they have no continuing duty to advise or guide a client to obtain additional coverage. Heightened duties may arise in the context of a special relationship where: (1) the agent receives additional compensation beyond a normal commission; (2) there is interaction between the agent and the insured regarding specific questions of coverage; and (3) an extended period of dealing.

New York courts have been careful to set forth that insurance agents do not provide professional services like a doctor or lawyer, and thus there does not exist a fiduciary duty in the context of insurance sales. Unless that is, there is a special relationship between the parties.

In the present case, the court found that Treiber obtained the coverage that was requested, and further, that there was no special relationship in existence. Curcio claimed that he worked almost exclusively with Treiber and they had a close personal relationship. He fleshed this out by saying that over the years Treiber consulted with him about various insurance needs and that he relied upon its superior knowledge. But the court found this relationship to be no different than the typical insurance broker and customer relationship. Curcio did not delegate decision-making responsibilities to Treiber nor did Treiber initiate their business relationship.

The court also quickly disposed of plaintiff’s fraud claims.

The decision is yet another reminder that New York law is rather protective of insurance brokers, probably due to a fear that there would otherwise be an opening of the floodgates for litigation when an insurance purchase does not turn out as well as expected by the insured. The end result is that New York insurance consumers must do their own due diligence before purchasing an insurance product and cannot simply rely on the advice of the broker. Unless, perhaps, there is a special relationship between the two. But even then, it’s not a good idea.



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