This case Filed 8/29/08 Boyer v. Wells CA2/2 addresses the issue and is a recent case. Take note that it mentions Good Samaritan but it also mentions that the reason it wasn't a triable issue was becasue of this "Evidence that once in 2001 Wells notified appellant about his late premium payment was too limited an undertaking to support the creation of a voluntarily-assumed duty."
I would that that the word once would be key to the determination of an agent assuming responsability under a Good Samaritan rule.
Also if that constant late paying client starts to assume you will call them to warn them about being late this could apply, "harm is suffered because of the other’s reliance upon the undertaking."
"Moreover, appellant failed to demonstrate a triable issue of fact as to whether Wells had voluntarily assumed a duty of care by proffering evidence that Wells had once previously called him to tell him that his premium payment was late and his homeowner’s insurance policy was about to lapse. “t is settled law that one ‘who, having no initial duty to do so, undertakes to come to the aid of another—the “good Samaritan”’—has ‘a duty to exercise due care in performance and is liable if (a) his failure to exercise care increases the risk of such harm, or (b) the harm is suffered because of the other’s reliance upon the undertaking.’ [Citations.]” (Artiglio v. Corning Inc., supra, 18 Cal.4th at p. 613.) But it is equally well settled that “‘[t]he duty of a “good Samaritan” is limited. Once he has performed his voluntary act he is not required to continue to render aid indefinitely.’ [Citations.]” (Id. at p. 615; accord, Browne v. Turner Construction Co. (2005) 127 Cal.App.4th 1334, 1348 [“A Good Samaritan does not enslave himself eternally to the beneficiary of his undertaking merely by once rendering aid”].) Evidence that once in 2001 Wells notified appellant about his late premium payment was too limited an undertaking to support the creation of a voluntarily-assumed duty."
Remember the give notice of late payment thread ..well
Moderators: Josh, independent guy
Re: Remember the give notice of late payment thread ..well
Thanks, Etimer - good post!
The warning I would take away from this citation is that we must exercise care in the process of notifying the insured (sticking to and verifying the facts of the issue in written or oral communication), so that he does not suffer harm as a result of our failure to exercise such care.
So, providing the service of notifying the insured of pending cancellation for nonpayment of premium does not save us from being sued, but we now have case law that gives us hope of successfully weathering the action brought against us, and, the fact that we extended the courtesy of notifying our insured neither obligates us to make successive follow-up calls to see if he made the payment, nor does it obligate us to provide this same service in the future.
The warning I would take away from this citation is that we must exercise care in the process of notifying the insured (sticking to and verifying the facts of the issue in written or oral communication), so that he does not suffer harm as a result of our failure to exercise such care.
So, providing the service of notifying the insured of pending cancellation for nonpayment of premium does not save us from being sued, but we now have case law that gives us hope of successfully weathering the action brought against us, and, the fact that we extended the courtesy of notifying our insured neither obligates us to make successive follow-up calls to see if he made the payment, nor does it obligate us to provide this same service in the future.
Re: Remember the give notice of late payment thread ..well
You should not walk away from the case thinking that the good Samaritan tenet will protect you. The protection was allowable because the elements of the claim did not show a constant reminder or expectation was established.
If you start giving the notice on a constant reminder basis then expectation is established for the insured and you have established a service. That service may very well quash the protection of the good Samaritan rule. Possibly providing the service of notifying the insured of pending cancellation for nonpayment of premium places you at greater risk. I imagine if the insured could have shown that the agent usually gave him a reminder about late payments, the agent would have been held liable.
In my book, I am not about to establish a personal lines service of reminding those few that don't pay their invoices. The risk to reward ratio is not good enough for me. Commercial is a bit of a different story because the accounts payable people can change or due to no fault of the insured, mess up. The reward to risk is better.
If you start giving the notice on a constant reminder basis then expectation is established for the insured and you have established a service. That service may very well quash the protection of the good Samaritan rule. Possibly providing the service of notifying the insured of pending cancellation for nonpayment of premium places you at greater risk. I imagine if the insured could have shown that the agent usually gave him a reminder about late payments, the agent would have been held liable.
In my book, I am not about to establish a personal lines service of reminding those few that don't pay their invoices. The risk to reward ratio is not good enough for me. Commercial is a bit of a different story because the accounts payable people can change or due to no fault of the insured, mess up. The reward to risk is better.
Re: Remember the give notice of late payment thread ..well
I certainly understand your position, but respectfully disagree.
The “good Samaritan”—has ‘a duty to exercise due care in performance and is liable if (a) his failure to exercise care increases the risk of such harm," or
(b) the "harm is suffered because of the other’s reliance upon the undertaking." This speaks to the present undertaking, not future service - ("But it is equally well settled that ‘[t]he duty of a “good Samaritan” is limited. Once he has performed his voluntary act he is not required to continue to render aid indefinitely.’") He is not required to follow-up.
The rendering of a service, though it may establish an expectation in the mind of the client, does not establish a future obligation on the agent to render the same service at some point in the future. The rendering of service is strictly voluntary and the decision whether or not to render that service is made on a case by case basis. The issue, it seems to me, is a "duty to exercise due care in performance."
Having said all of that (probably just to hear my inner voice echo off the sides of my skull), I too am a bit concerned that the ruling left open to another court to determine whether an action is triable based on the frequency of service rendered, "the reason it wasn't a triable issue was because of this 'Evidence that once in 2001 Wells notified appellant about his late premium payment was too limited an undertaking to support the creation of a voluntarily-assumed duty.'" We are now, and forever will be, at the mercy of the court.
But, what about consistency of practice for services rendered from client to client, and having a court decide that personal lines clients were placed in a class and treated differently from commercial lines clients unfairly? Do you disclose to your clients that some may receive services that others will be denied, based on a risk/reward ratio?
The “good Samaritan”—has ‘a duty to exercise due care in performance and is liable if (a) his failure to exercise care increases the risk of such harm," or
(b) the "harm is suffered because of the other’s reliance upon the undertaking." This speaks to the present undertaking, not future service - ("But it is equally well settled that ‘[t]he duty of a “good Samaritan” is limited. Once he has performed his voluntary act he is not required to continue to render aid indefinitely.’") He is not required to follow-up.
The rendering of a service, though it may establish an expectation in the mind of the client, does not establish a future obligation on the agent to render the same service at some point in the future. The rendering of service is strictly voluntary and the decision whether or not to render that service is made on a case by case basis. The issue, it seems to me, is a "duty to exercise due care in performance."
Having said all of that (probably just to hear my inner voice echo off the sides of my skull), I too am a bit concerned that the ruling left open to another court to determine whether an action is triable based on the frequency of service rendered, "the reason it wasn't a triable issue was because of this 'Evidence that once in 2001 Wells notified appellant about his late premium payment was too limited an undertaking to support the creation of a voluntarily-assumed duty.'" We are now, and forever will be, at the mercy of the court.
But, what about consistency of practice for services rendered from client to client, and having a court decide that personal lines clients were placed in a class and treated differently from commercial lines clients unfairly? Do you disclose to your clients that some may receive services that others will be denied, based on a risk/reward ratio?
Re: Remember the give notice of late payment thread ..well
I have followed these threads pertaining to this and I got a magizine and it had this article in it, should help clarify it all...
http://www.agentandbroker.com/ME2/dirmo ... C88EFBDF33
Down to Cases: Agents Only Owe Duties Actually Assumed
Although insurance agents and brokers accept many duties owed to their customers, they are not guarantors of every problem that may face an insured. In Boyer v. Wells, No. B205345 (Cal.App. Dist.2 08/29/2008), a case not officially published, the California Court of Appeal ruled that an insurance agent only needs to fulfill duties actually assumed and that unless the agent makes specific promises, the agent is not obligated to an insured. In Boyer v. Wells, the insured failed to pay his premium and tried to blame cancellation on the agent who failed to force him to pay.
Generally, “an insurance agent does not have a duty to volunteer to an insured that the latter should procure additional or different insurance coverage…” The rule changes when the agent misrepresents the nature, extent or scope of the coverage; the insured requests a particular type or extent of coverage; or the agent assumes an additional duty by either express agreement or by “holding himself out” as having expertise in a given field of insurance being sought by the insured.
In Boyer v. Wells, Daniel J. Wells, the agent, performed his job correctly, but was still sued and required to defend the suit through summary judgment and appeal. As a Farmers group agent, he was insured under the group errors and omissions policy that all Farmers agents maintain. Regardless of how careful an agent is, he or she may be sued and will need to pay the costs to defend the suit.
Steven Edward Boyer appealed from a grant of summary judgment entered in favor of Wells. A fire had destroyed Boyer’s house and he sued Fire Insurance Exchange and its agent Wells when Fire Insurance denied his claim. Boyer alleged that Wells negligently failed to warn him that his
premium was due and his policy would lapse absent of timely payment, and that Wells negligently failed to secure a policy that provided for full replacement cost over time.
The trial court granted summary judgment, ruling that Wells owed no duty to warn and that Boyer suffered no damages under his replacement cost policy. The trial court also declined Boyer’s request to expand the theory supporting his duty to warn claim, sustained Wells’ objection to a document containing a statement made by Wells, and denied Boyer’s continuance request.
The Court of Appeal affirmed and concluded that as a matter of law, Wells owed no duty to warn Boyer to pay his premium or risk cancellation of his policy. In addition, the Court of Appeal concluded that Boyer suffered no damages, as the cost to replace his house was covered by his policy.
The Backstory
Wells had been an agent for Fire Insurance for more than 20 years. In 1998, Boyer contacted Wells to obtain homeowner’s insurance for his residence in Escondido, Calif., Boyer requested a policy that would provide for full replacement cost over time. After Boyer provided Wells with the necessary information, Fire Insurance issued a homeowner’s insurance policy to Boyer in October 1998. Boyer renewed the policy annually through October 2004. On the declarations page, the policy provided: “This policy will continue for successive policy periods, if: (1) we elect to continue this insurance, and (2) if you pay the renewal premium for each successive policy period as required by our premiums, rules and forms then in effect.”
The policy’s replacement cost limits increased during each successive policy period, and by November 2005, Boyer’s dwelling and personal property coverage totaled $352,500. Boyer did not pay the premium when it was due on Oct. 22, 2005, and on Nov. 1, 2005, Fire Insurance mailed a notice stating the policy was out of force because of nonpayment. A fire destroyed Boyer’s residence on Nov. 11, 2005, and Boyer was arrested on that date.
Every week, Wells received a report from Fire Insurance advising him of policies where the premium had not been paid. On Nov. 14, 2005, Wells received a report that identified Boyer’s policy as one for which a premium was owed. The same day, Wells sent a letter to Boyer at his home address advising him of the need to pay the premium to avoid a lapse in coverage. Wells sent this letter as a courtesy; sending this type of notice was not one of his job responsibilities and he had never sent a similar notice to Boyer.
However, at one point in 2001, Wells had called Boyer to warn him that his premium payment was late and his policy was about to lapse. At the time he sent the November 2005 letter, Wells knew that Boyer was in jail and had tried unsuccessfully to contact him there—Wells had no other address to contact Boyer except for his home address.
On Nov. 18, 2005, Fire Insurance sent a letter to Boyer advising him that his policy had been cancelled as of Oct. 22, 2005, for nonpayment of premium. Boyer did not receive any previous notice from Fire Insurance regarding its intent to cancel his policy. When Wells sent a notice to Boyer, he knew that the policy was in a “grace period” until Nov. 18, 2005—-meaning that if Boyer paid his premium on or before that date, the policy would remain in effect. If Boyer failed to pay his premium by that date, the policy would cancel retroactively to the renewal date of Oct. 22, 2005. Ultimately, Wells reported the claim on Boyer’s behalf and Fire Insurance denied the claim.
Boyer sued Wells and Fire Insurance in February 2007. The action against Wells alleged that he failed to warn Boyer that his insurance premium had not been paid for the period beginning Oct. 22, 2005, and that Wells failed to use due care in securing that the policy would provide for full replacement cost in the event of a loss.
Judgement
The trial court entered judgment in favor of Wells and this appeal followed. On Nov. 14, 2007, the trial court granted summary adjudication in favor of Fire Insurance, and the remaining causes of action were set for trial on June 30, 2008.
Insurance agents and brokers owe duties to insureds. Summarizing these duties, the court in Jones v. Grewe (1987) 189 Cal.App.3d 950, 954, stated:
“Ordinarily, an insurance agent assumes only those duties normally found in any agency relationship. This includes the obligation to use reasonable care, diligence, and judgment in procuring the insurance requested by an insured. The mere existence of such a relationship imposes no duty on the agent to advise the insured on specific insurance matters.
An agent may point out to [the insured] the advantages of additional coverage and may ferret out additional facts from the insured applicable to such coverage, but he is under no obligation to do so; nor is the insured under an obligation to respond.”
The California Insurance Code obligates an insurer—not an insurance agent—to provide notice of renewal. Insurance Code section 678, subdivision (a)(1), provides in pertinent part that:
“[A]t least 45 days prior to policy expiration, an insurer shall deliver to the named insured or mail to the named insured at the address shown in the policy, either of the following:
1) An offer of renewal of the policy contingent upon payment of premium as stated in the offer...” Upon an insured’s nonpayment of premium, however, the insurer may mail a notice of cancellation of the policy no less than 10 days prior to the effective date of the cancellation. (Ins. Code, §§ 676, 677.2, subd. [c].) Any notice of cancellation must be mailed to the named insured at the address shown in the policy. (Ins. Code, § 677, subd. [a].)”
In Kotlar v. Hartford Fire Ins. Co. (2000) 83 Cal.App.4th 1116, 1123 (Kotlar), the court held that a broker owes no duty to an insured to notify the insured of intent to cancel a policy for nonpayment of premium. The court noted that a broker’s obligation to use reasonable care could not be construed to encompass the duty to notify the insured of the insurer’s intent to cancel the policy, particularly when the broker also acts for an agent of the insurer with respect to the policy.
Whether a duty of care exists is a question of law for the court. The Court of Appeal concluded that Wells owed no duty to Boyer to warn that he needed to pay his premium or risk cancellation of his policy. This case exemplifies the situation discussed in Kotlar involving an insurance agent, rather than a broker, with duties to both the insurance company and the insured. Generally, “an insurance agent does not have a duty to volunteer to an insured that the latter should procure additional or different insurance coverage...”
The rule changes when:
• The agent misrepresents the nature, extent or scope of the coverage being offered or provided
• There is a request or inquiry by the insured for a particular type or extent of coverage
• The agent assumes an additional duty by either express agreement or by “holding himself out” as having expertise in a given field of insurance being sought by the insured.
The duty Boyer sought to impose on Wells does not involve any misrepresentation on the part of Wells, any request by Boyer for notification or any expertise professed by Wells. The court noted that Boyer failed to demonstrate a triable issue of fact as to whether Wells had voluntarily assumed a duty of care by proffering evidence that Wells had previously called him to tell him that his premium payment was late and his homeowner’s insurance policy was about to lapse.
It is settled law in California that “[t]he duty of a ‘Good Samaritan’” is limited. Once he has performed his voluntary act, he is not required to continue to render aid indefinitely. Browne v. Turner Construction Co. (2005) 127 Cal.App.4th 1334, 1348 that held that “A Good Samaritan does not enslave himself eternally to the beneficiary of his undertaking merely by once rendering aid.” Evidence that once in 2001 Wells notified Boyer about his late premium payment was too limited an undertaking to support the creation of a voluntarily assumed duty.
Finally, the court refused Boyer’s invitation to create a new duty on the part of insurance agents to warn that a policy premium is due. The court was guided by the analysis in Fitzpatrick v. Hayes, 57 Cal.App.4th 916, where the court declined to create a new duty on the part of insurance agents to inform insureds about the availability of personal umbrella coverage.
Boyer’s second cause of action against Wells alleged that Wells negligently failed to obtain replacement cost coverage for Boyer’s residence. In support of his summary judgment motion, Wells offered uncontradicted evidence that the limits of Boyer’s replacement cost policy had increased over time, such that a total of $352,000 in coverage was available at the time Boyer sustained his loss. In its order granting summary judgment, the trial court ruled:
“[A]ssuming any duty was owed plaintiff, plaintiff cannot establish he has or will sustain any damages as a result of the limits which were procured for the policy. Plaintiff estimated the repair cost for the property was $337,365.22, while the amount of available coverage was $352,000. Plaintiff did not present an estimate or any specific evidence demonstrating the cost of repair would be greater than those amounts.”
The Court of Appeal found no basis to disturb this conclusion of the trial court. In the Boyer case, the undisputed evidence demonstrated that five years after Boyer obtained a policy and asked for a “full replacement value policy,” he signed a policy expressly providing for full replacement cost coverage up to policy limits. There was no evidence that Boyer sought clarification from Wells after receiving the policy at any time during those 5 years.
Barry Zalma, Esq., CFE, is a California attorney specializing in expert witness testimony and consulting with plaintiffs and defendants on insurance coverage and claims handling. He founded Zalma Insurance Consultants in 2001 and serves as its senior consultant. Zalma also publishes the free Zalma’s Insurance Fraud Letter every two weeks at http://www.zalma.com. He can be reached at zalma@zalma.com.
http://www.agentandbroker.com/ME2/dirmo ... C88EFBDF33
Down to Cases: Agents Only Owe Duties Actually Assumed
Although insurance agents and brokers accept many duties owed to their customers, they are not guarantors of every problem that may face an insured. In Boyer v. Wells, No. B205345 (Cal.App. Dist.2 08/29/2008), a case not officially published, the California Court of Appeal ruled that an insurance agent only needs to fulfill duties actually assumed and that unless the agent makes specific promises, the agent is not obligated to an insured. In Boyer v. Wells, the insured failed to pay his premium and tried to blame cancellation on the agent who failed to force him to pay.
Generally, “an insurance agent does not have a duty to volunteer to an insured that the latter should procure additional or different insurance coverage…” The rule changes when the agent misrepresents the nature, extent or scope of the coverage; the insured requests a particular type or extent of coverage; or the agent assumes an additional duty by either express agreement or by “holding himself out” as having expertise in a given field of insurance being sought by the insured.
In Boyer v. Wells, Daniel J. Wells, the agent, performed his job correctly, but was still sued and required to defend the suit through summary judgment and appeal. As a Farmers group agent, he was insured under the group errors and omissions policy that all Farmers agents maintain. Regardless of how careful an agent is, he or she may be sued and will need to pay the costs to defend the suit.
Steven Edward Boyer appealed from a grant of summary judgment entered in favor of Wells. A fire had destroyed Boyer’s house and he sued Fire Insurance Exchange and its agent Wells when Fire Insurance denied his claim. Boyer alleged that Wells negligently failed to warn him that his
premium was due and his policy would lapse absent of timely payment, and that Wells negligently failed to secure a policy that provided for full replacement cost over time.
The trial court granted summary judgment, ruling that Wells owed no duty to warn and that Boyer suffered no damages under his replacement cost policy. The trial court also declined Boyer’s request to expand the theory supporting his duty to warn claim, sustained Wells’ objection to a document containing a statement made by Wells, and denied Boyer’s continuance request.
The Court of Appeal affirmed and concluded that as a matter of law, Wells owed no duty to warn Boyer to pay his premium or risk cancellation of his policy. In addition, the Court of Appeal concluded that Boyer suffered no damages, as the cost to replace his house was covered by his policy.
The Backstory
Wells had been an agent for Fire Insurance for more than 20 years. In 1998, Boyer contacted Wells to obtain homeowner’s insurance for his residence in Escondido, Calif., Boyer requested a policy that would provide for full replacement cost over time. After Boyer provided Wells with the necessary information, Fire Insurance issued a homeowner’s insurance policy to Boyer in October 1998. Boyer renewed the policy annually through October 2004. On the declarations page, the policy provided: “This policy will continue for successive policy periods, if: (1) we elect to continue this insurance, and (2) if you pay the renewal premium for each successive policy period as required by our premiums, rules and forms then in effect.”
The policy’s replacement cost limits increased during each successive policy period, and by November 2005, Boyer’s dwelling and personal property coverage totaled $352,500. Boyer did not pay the premium when it was due on Oct. 22, 2005, and on Nov. 1, 2005, Fire Insurance mailed a notice stating the policy was out of force because of nonpayment. A fire destroyed Boyer’s residence on Nov. 11, 2005, and Boyer was arrested on that date.
Every week, Wells received a report from Fire Insurance advising him of policies where the premium had not been paid. On Nov. 14, 2005, Wells received a report that identified Boyer’s policy as one for which a premium was owed. The same day, Wells sent a letter to Boyer at his home address advising him of the need to pay the premium to avoid a lapse in coverage. Wells sent this letter as a courtesy; sending this type of notice was not one of his job responsibilities and he had never sent a similar notice to Boyer.
However, at one point in 2001, Wells had called Boyer to warn him that his premium payment was late and his policy was about to lapse. At the time he sent the November 2005 letter, Wells knew that Boyer was in jail and had tried unsuccessfully to contact him there—Wells had no other address to contact Boyer except for his home address.
On Nov. 18, 2005, Fire Insurance sent a letter to Boyer advising him that his policy had been cancelled as of Oct. 22, 2005, for nonpayment of premium. Boyer did not receive any previous notice from Fire Insurance regarding its intent to cancel his policy. When Wells sent a notice to Boyer, he knew that the policy was in a “grace period” until Nov. 18, 2005—-meaning that if Boyer paid his premium on or before that date, the policy would remain in effect. If Boyer failed to pay his premium by that date, the policy would cancel retroactively to the renewal date of Oct. 22, 2005. Ultimately, Wells reported the claim on Boyer’s behalf and Fire Insurance denied the claim.
Boyer sued Wells and Fire Insurance in February 2007. The action against Wells alleged that he failed to warn Boyer that his insurance premium had not been paid for the period beginning Oct. 22, 2005, and that Wells failed to use due care in securing that the policy would provide for full replacement cost in the event of a loss.
Judgement
The trial court entered judgment in favor of Wells and this appeal followed. On Nov. 14, 2007, the trial court granted summary adjudication in favor of Fire Insurance, and the remaining causes of action were set for trial on June 30, 2008.
Insurance agents and brokers owe duties to insureds. Summarizing these duties, the court in Jones v. Grewe (1987) 189 Cal.App.3d 950, 954, stated:
“Ordinarily, an insurance agent assumes only those duties normally found in any agency relationship. This includes the obligation to use reasonable care, diligence, and judgment in procuring the insurance requested by an insured. The mere existence of such a relationship imposes no duty on the agent to advise the insured on specific insurance matters.
An agent may point out to [the insured] the advantages of additional coverage and may ferret out additional facts from the insured applicable to such coverage, but he is under no obligation to do so; nor is the insured under an obligation to respond.”
The California Insurance Code obligates an insurer—not an insurance agent—to provide notice of renewal. Insurance Code section 678, subdivision (a)(1), provides in pertinent part that:
“[A]t least 45 days prior to policy expiration, an insurer shall deliver to the named insured or mail to the named insured at the address shown in the policy, either of the following:
1) An offer of renewal of the policy contingent upon payment of premium as stated in the offer...” Upon an insured’s nonpayment of premium, however, the insurer may mail a notice of cancellation of the policy no less than 10 days prior to the effective date of the cancellation. (Ins. Code, §§ 676, 677.2, subd. [c].) Any notice of cancellation must be mailed to the named insured at the address shown in the policy. (Ins. Code, § 677, subd. [a].)”
In Kotlar v. Hartford Fire Ins. Co. (2000) 83 Cal.App.4th 1116, 1123 (Kotlar), the court held that a broker owes no duty to an insured to notify the insured of intent to cancel a policy for nonpayment of premium. The court noted that a broker’s obligation to use reasonable care could not be construed to encompass the duty to notify the insured of the insurer’s intent to cancel the policy, particularly when the broker also acts for an agent of the insurer with respect to the policy.
Whether a duty of care exists is a question of law for the court. The Court of Appeal concluded that Wells owed no duty to Boyer to warn that he needed to pay his premium or risk cancellation of his policy. This case exemplifies the situation discussed in Kotlar involving an insurance agent, rather than a broker, with duties to both the insurance company and the insured. Generally, “an insurance agent does not have a duty to volunteer to an insured that the latter should procure additional or different insurance coverage...”
The rule changes when:
• The agent misrepresents the nature, extent or scope of the coverage being offered or provided
• There is a request or inquiry by the insured for a particular type or extent of coverage
• The agent assumes an additional duty by either express agreement or by “holding himself out” as having expertise in a given field of insurance being sought by the insured.
The duty Boyer sought to impose on Wells does not involve any misrepresentation on the part of Wells, any request by Boyer for notification or any expertise professed by Wells. The court noted that Boyer failed to demonstrate a triable issue of fact as to whether Wells had voluntarily assumed a duty of care by proffering evidence that Wells had previously called him to tell him that his premium payment was late and his homeowner’s insurance policy was about to lapse.
It is settled law in California that “[t]he duty of a ‘Good Samaritan’” is limited. Once he has performed his voluntary act, he is not required to continue to render aid indefinitely. Browne v. Turner Construction Co. (2005) 127 Cal.App.4th 1334, 1348 that held that “A Good Samaritan does not enslave himself eternally to the beneficiary of his undertaking merely by once rendering aid.” Evidence that once in 2001 Wells notified Boyer about his late premium payment was too limited an undertaking to support the creation of a voluntarily assumed duty.
Finally, the court refused Boyer’s invitation to create a new duty on the part of insurance agents to warn that a policy premium is due. The court was guided by the analysis in Fitzpatrick v. Hayes, 57 Cal.App.4th 916, where the court declined to create a new duty on the part of insurance agents to inform insureds about the availability of personal umbrella coverage.
Boyer’s second cause of action against Wells alleged that Wells negligently failed to obtain replacement cost coverage for Boyer’s residence. In support of his summary judgment motion, Wells offered uncontradicted evidence that the limits of Boyer’s replacement cost policy had increased over time, such that a total of $352,000 in coverage was available at the time Boyer sustained his loss. In its order granting summary judgment, the trial court ruled:
“[A]ssuming any duty was owed plaintiff, plaintiff cannot establish he has or will sustain any damages as a result of the limits which were procured for the policy. Plaintiff estimated the repair cost for the property was $337,365.22, while the amount of available coverage was $352,000. Plaintiff did not present an estimate or any specific evidence demonstrating the cost of repair would be greater than those amounts.”
The Court of Appeal found no basis to disturb this conclusion of the trial court. In the Boyer case, the undisputed evidence demonstrated that five years after Boyer obtained a policy and asked for a “full replacement value policy,” he signed a policy expressly providing for full replacement cost coverage up to policy limits. There was no evidence that Boyer sought clarification from Wells after receiving the policy at any time during those 5 years.
Barry Zalma, Esq., CFE, is a California attorney specializing in expert witness testimony and consulting with plaintiffs and defendants on insurance coverage and claims handling. He founded Zalma Insurance Consultants in 2001 and serves as its senior consultant. Zalma also publishes the free Zalma’s Insurance Fraud Letter every two weeks at http://www.zalma.com. He can be reached at zalma@zalma.com.
Re: Remember the give notice of late payment thread ..well
Looks like you read the same broker/agent magazine. The story is in my recent Agent/Broker mag.
The people that keep supporting the positive idea that agents should continually provide a service of reminders, is not reading the courts remarks. I am not sure what part of the court statement about limited they don't understand "was too limited an undertaking to support the creation of a voluntarily assumed duty."
<“A Good Samaritan does not enslave himself eternally to the beneficiary of his undertaking merely by once rendering aid.” Evidence that once in 2001 Wells notified Boyer about his late premium payment was too limited an undertaking to support the creation of a voluntarily assumed duty.>
I guaranteed you that the agents that give reminders to certain clients, on a regular basis will never hear a court say their undertaking was too limited to create a voluntary duty.
One of my competitors, a big agency with about 70 employees, recently let someone go for giving constant reminders to certain personal auto clients. The agent was repeatedly warned not to do it but some people just don't listen to the managers.
The people that keep supporting the positive idea that agents should continually provide a service of reminders, is not reading the courts remarks. I am not sure what part of the court statement about limited they don't understand "was too limited an undertaking to support the creation of a voluntarily assumed duty."
<“A Good Samaritan does not enslave himself eternally to the beneficiary of his undertaking merely by once rendering aid.” Evidence that once in 2001 Wells notified Boyer about his late premium payment was too limited an undertaking to support the creation of a voluntarily assumed duty.>
I guaranteed you that the agents that give reminders to certain clients, on a regular basis will never hear a court say their undertaking was too limited to create a voluntary duty.
One of my competitors, a big agency with about 70 employees, recently let someone go for giving constant reminders to certain personal auto clients. The agent was repeatedly warned not to do it but some people just don't listen to the managers.
yotes fan wrote:I have followed these threads pertaining to this and I got a magizine and it had this article in it, should help clarify it all...
http://www.agentandbroker.com/ME2/dirmo ... C88EFBDF33
Down to Cases: Agents Only Owe Duties Actually Assumed
Although insurance agents and brokers accept many duties owed to their customers, they are not guarantors of every problem that may face an insured. In Boyer v. Wells, No. B205345 (Cal.App. Dist.2 08/29/2008), a case not officially published, the California Court of Appeal ruled that an insurance agent only needs to fulfill duties actually assumed and that unless the agent makes specific promises, the agent is not obligated to an insured. In Boyer v. Wells, the insured failed to pay his premium and tried to blame cancellation on the agent who failed to force him to pay.
Generally, “an insurance agent does not have a duty to volunteer to an insured that the latter should procure additional or different insurance coverage…” The rule changes when the agent misrepresents the nature, extent or scope of the coverage; the insured requests a particular type or extent of coverage; or the agent assumes an additional duty by either express agreement or by “holding himself out” as having expertise in a given field of insurance being sought by the insured.
In Boyer v. Wells, Daniel J. Wells, the agent, performed his job correctly, but was still sued and required to defend the suit through summary judgment and appeal. As a Farmers group agent, he was insured under the group errors and omissions policy that all Farmers agents maintain. Regardless of how careful an agent is, he or she may be sued and will need to pay the costs to defend the suit.
Steven Edward Boyer appealed from a grant of summary judgment entered in favor of Wells. A fire had destroyed Boyer’s house and he sued Fire Insurance Exchange and its agent Wells when Fire Insurance denied his claim. Boyer alleged that Wells negligently failed to warn him that his
premium was due and his policy would lapse absent of timely payment, and that Wells negligently failed to secure a policy that provided for full replacement cost over time.
The trial court granted summary judgment, ruling that Wells owed no duty to warn and that Boyer suffered no damages under his replacement cost policy. The trial court also declined Boyer’s request to expand the theory supporting his duty to warn claim, sustained Wells’ objection to a document containing a statement made by Wells, and denied Boyer’s continuance request.
The Court of Appeal affirmed and concluded that as a matter of law, Wells owed no duty to warn Boyer to pay his premium or risk cancellation of his policy. In addition, the Court of Appeal concluded that Boyer suffered no damages, as the cost to replace his house was covered by his policy.
The Backstory
Wells had been an agent for Fire Insurance for more than 20 years. In 1998, Boyer contacted Wells to obtain homeowner’s insurance for his residence in Escondido, Calif., Boyer requested a policy that would provide for full replacement cost over time. After Boyer provided Wells with the necessary information, Fire Insurance issued a homeowner’s insurance policy to Boyer in October 1998. Boyer renewed the policy annually through October 2004. On the declarations page, the policy provided: “This policy will continue for successive policy periods, if: (1) we elect to continue this insurance, and (2) if you pay the renewal premium for each successive policy period as required by our premiums, rules and forms then in effect.”
The policy’s replacement cost limits increased during each successive policy period, and by November 2005, Boyer’s dwelling and personal property coverage totaled $352,500. Boyer did not pay the premium when it was due on Oct. 22, 2005, and on Nov. 1, 2005, Fire Insurance mailed a notice stating the policy was out of force because of nonpayment. A fire destroyed Boyer’s residence on Nov. 11, 2005, and Boyer was arrested on that date.
Every week, Wells received a report from Fire Insurance advising him of policies where the premium had not been paid. On Nov. 14, 2005, Wells received a report that identified Boyer’s policy as one for which a premium was owed. The same day, Wells sent a letter to Boyer at his home address advising him of the need to pay the premium to avoid a lapse in coverage. Wells sent this letter as a courtesy; sending this type of notice was not one of his job responsibilities and he had never sent a similar notice to Boyer.
However, at one point in 2001, Wells had called Boyer to warn him that his premium payment was late and his policy was about to lapse. At the time he sent the November 2005 letter, Wells knew that Boyer was in jail and had tried unsuccessfully to contact him there—Wells had no other address to contact Boyer except for his home address.
On Nov. 18, 2005, Fire Insurance sent a letter to Boyer advising him that his policy had been cancelled as of Oct. 22, 2005, for nonpayment of premium. Boyer did not receive any previous notice from Fire Insurance regarding its intent to cancel his policy. When Wells sent a notice to Boyer, he knew that the policy was in a “grace period” until Nov. 18, 2005—-meaning that if Boyer paid his premium on or before that date, the policy would remain in effect. If Boyer failed to pay his premium by that date, the policy would cancel retroactively to the renewal date of Oct. 22, 2005. Ultimately, Wells reported the claim on Boyer’s behalf and Fire Insurance denied the claim.
Boyer sued Wells and Fire Insurance in February 2007. The action against Wells alleged that he failed to warn Boyer that his insurance premium had not been paid for the period beginning Oct. 22, 2005, and that Wells failed to use due care in securing that the policy would provide for full replacement cost in the event of a loss.
Judgement
The trial court entered judgment in favor of Wells and this appeal followed. On Nov. 14, 2007, the trial court granted summary adjudication in favor of Fire Insurance, and the remaining causes of action were set for trial on June 30, 2008.
Insurance agents and brokers owe duties to insureds. Summarizing these duties, the court in Jones v. Grewe (1987) 189 Cal.App.3d 950, 954, stated:
“Ordinarily, an insurance agent assumes only those duties normally found in any agency relationship. This includes the obligation to use reasonable care, diligence, and judgment in procuring the insurance requested by an insured. The mere existence of such a relationship imposes no duty on the agent to advise the insured on specific insurance matters.
An agent may point out to [the insured] the advantages of additional coverage and may ferret out additional facts from the insured applicable to such coverage, but he is under no obligation to do so; nor is the insured under an obligation to respond.”
The California Insurance Code obligates an insurer—not an insurance agent—to provide notice of renewal. Insurance Code section 678, subdivision (a)(1), provides in pertinent part that:
“[A]t least 45 days prior to policy expiration, an insurer shall deliver to the named insured or mail to the named insured at the address shown in the policy, either of the following:
1) An offer of renewal of the policy contingent upon payment of premium as stated in the offer...” Upon an insured’s nonpayment of premium, however, the insurer may mail a notice of cancellation of the policy no less than 10 days prior to the effective date of the cancellation. (Ins. Code, §§ 676, 677.2, subd. [c].) Any notice of cancellation must be mailed to the named insured at the address shown in the policy. (Ins. Code, § 677, subd. [a].)”
In Kotlar v. Hartford Fire Ins. Co. (2000) 83 Cal.App.4th 1116, 1123 (Kotlar), the court held that a broker owes no duty to an insured to notify the insured of intent to cancel a policy for nonpayment of premium. The court noted that a broker’s obligation to use reasonable care could not be construed to encompass the duty to notify the insured of the insurer’s intent to cancel the policy, particularly when the broker also acts for an agent of the insurer with respect to the policy.
Whether a duty of care exists is a question of law for the court. The Court of Appeal concluded that Wells owed no duty to Boyer to warn that he needed to pay his premium or risk cancellation of his policy. This case exemplifies the situation discussed in Kotlar involving an insurance agent, rather than a broker, with duties to both the insurance company and the insured. Generally, “an insurance agent does not have a duty to volunteer to an insured that the latter should procure additional or different insurance coverage...”
The rule changes when:
• The agent misrepresents the nature, extent or scope of the coverage being offered or provided
• There is a request or inquiry by the insured for a particular type or extent of coverage
• The agent assumes an additional duty by either express agreement or by “holding himself out” as having expertise in a given field of insurance being sought by the insured.
The duty Boyer sought to impose on Wells does not involve any misrepresentation on the part of Wells, any request by Boyer for notification or any expertise professed by Wells. The court noted that Boyer failed to demonstrate a triable issue of fact as to whether Wells had voluntarily assumed a duty of care by proffering evidence that Wells had previously called him to tell him that his premium payment was late and his homeowner’s insurance policy was about to lapse.
It is settled law in California that “[t]he duty of a ‘Good Samaritan’” is limited. Once he has performed his voluntary act, he is not required to continue to render aid indefinitely. Browne v. Turner Construction Co. (2005) 127 Cal.App.4th 1334, 1348 that held that “A Good Samaritan does not enslave himself eternally to the beneficiary of his undertaking merely by once rendering aid.” Evidence that once in 2001 Wells notified Boyer about his late premium payment was too limited an undertaking to support the creation of a voluntarily assumed duty.
Finally, the court refused Boyer’s invitation to create a new duty on the part of insurance agents to warn that a policy premium is due. The court was guided by the analysis in Fitzpatrick v. Hayes, 57 Cal.App.4th 916, where the court declined to create a new duty on the part of insurance agents to inform insureds about the availability of personal umbrella coverage.
Boyer’s second cause of action against Wells alleged that Wells negligently failed to obtain replacement cost coverage for Boyer’s residence. In support of his summary judgment motion, Wells offered uncontradicted evidence that the limits of Boyer’s replacement cost policy had increased over time, such that a total of $352,000 in coverage was available at the time Boyer sustained his loss. In its order granting summary judgment, the trial court ruled:
“[A]ssuming any duty was owed plaintiff, plaintiff cannot establish he has or will sustain any damages as a result of the limits which were procured for the policy. Plaintiff estimated the repair cost for the property was $337,365.22, while the amount of available coverage was $352,000. Plaintiff did not present an estimate or any specific evidence demonstrating the cost of repair would be greater than those amounts.”
The Court of Appeal found no basis to disturb this conclusion of the trial court. In the Boyer case, the undisputed evidence demonstrated that five years after Boyer obtained a policy and asked for a “full replacement value policy,” he signed a policy expressly providing for full replacement cost coverage up to policy limits. There was no evidence that Boyer sought clarification from Wells after receiving the policy at any time during those 5 years.
Barry Zalma, Esq., CFE, is a California attorney specializing in expert witness testimony and consulting with plaintiffs and defendants on insurance coverage and claims handling. He founded Zalma Insurance Consultants in 2001 and serves as its senior consultant. Zalma also publishes the free Zalma’s Insurance Fraud Letter every two weeks at http://www.zalma.com. He can be reached at zalma@zalma.com.