View this article online: https://www.insurancejournal.com/magazines/mag-features/2005/12/18/151134.htm
An insurance broker was a representative for the California Fair Plan Insurance Co. with regard to the Northridge earthquake revival statute, which gave policyholders another year to file lawsuits against their insurers in connection with the 1994 earthquake, California’s 2nd Appellate District Court recently decided.
In Jose Arocho vs. California Fair Plan Insurance Co., the court overturned a lower court’s ruling dismissing the case.
The Fair Plan is a Los Angeles-based association of property insurers in the state that provides insurance to owners who are unable to obtain coverage in a normal market. After the Northridge earthquake, California Code of Procedure extended the statute of limitations to Dec. 31, 2001, for claims and lawsuits related to the quake provided the insured contacted the insurer or an insurer’s “representative” before Jan. 1, 2000, about potential damage.
Policyholders Jose and Maria Arocho contacted their broker shortly after the earthquake. The Fair Plan said the couple was not eligible to receive benefits because the broker was not a plan representative.
The court opinion said it is “generally true” that an insurance broker acts on behalf of an insured, while an agent acts on behalf of an insurer. However, the Fair Plan instructed its insureds that in the event of a loss, they should give immediate notice “to us or our agent,” when the only “agent” most insureds would have dealt with would have been the broker-producers who sold them their Fair Plan policy, the court said.