Do you know what duties insurance agents owe to their clients in Louisiana?
Insurance agents in Louisiana owe a duty of due diligence in obtaining coverage for their clients. Louisiana jurisprudence provides that an insurance agent who undertakes to procure insurance for another owes an obligation to his client to use reasonable diligence in attempting to place the insurance requested and to notify the client promptly if he failed to obtain the requested insurance. Hutchins v. Hill Petroleum Co., 609 So. 2d 306, 309 (La. Ct. App. 1992). The client may recover from the agent the loss he sustains as a result of the agent’s failure to procure the desired coverage if the actions of the agent warranted an assumption by the client that he was properly insured in the amount of the desired coverage. Id.
The elements of proof required to prove a claim alleging an insurance agent’s failure to obtain coverage are: (1) an undertaking or agreement by the insurance agent to procure insurance; (2) failure of the agent to use reasonable diligence in attempting to place the insurance and failure to notify the client properly if he has failed to obtain the insurance; and (3) the actions of the agent warranted an assumption by the client that he was properly insured. Id. Louisiana courts recognize that a party who claims that an insurance agent failed to use due diligence to procure insurance cannot recover for losses that are not within the scope of the coverage that the party actually requested. Id.
Limits on What the Insurance Agent is Required to Do
An insurance agent has no duty “to spontaneously identify a client’s needs and advise him as to whether he is underinsured or carries the right type of coverage.” City Blueprint & Supply Co., Inc. v. Boggio, 08-1093 (La. App. 4 Cir. 12/17/08), 3 So. 3d 62, 66. Similarly, in Whitehead v. State Farm Ins. Co., 2006 WL 3747520 (E.D. La. 2006),the court noted that there are no Louisiana cases that impose a duty on an agent to identify a client’s needs and advise the client that he is underinsured or does not have the proper type of insurance (observing that an agent would, however, have had a duty if the plaintiffs requested a specific type or amount of insurance that the agent failed to provide). Id. Moreover, the “client is himself considered responsible for adequately advising the agent of the coverage needed and for reading the clear provisions of the insurance policy.” Id.
As the Louisiana Supreme Court stated in Isidore Newman School v. J. Everett Eaves, Inc. and Westport Insurance Corp., 09–2161, p. 6 (La. 7/6/10), 42 So.3d 352, it is the client’s responsibility or duty, not the agent’s, to determine the amount of coverage needed and advise the agent of those needs, and upon receiving the policy of insurance the client has a duty to review the policy to ascertain that his needs are met.
Allen & Gooch is providing this legal update for informational purposes only. This article should not be construed as legal advice or a legal opinion as to any specific facts or circumstances. You should consult your own attorney concerning your particular situation and any specific legal questions you may have.